The title says it all, essentially.
I bought some $BITO a while back to get a little exposure to BTC in my brokerage account when I couldn't buy BTC directly. I know $BITO has paid out some decent dividends over the years, but those dividends have recently plummeted to near zero. And beyond the dividends, I have been surprised at how poorly it has tracked relative to BTC itself; I thought it would move (roughly) in tandem. Is there a way anyone can explain the divergence to this layman?
Thanks.
Why has $BITO diverged so much from BTC's price?
byu/JaxonKansas ininvesting
Posted by JaxonKansas
3 Comments
You should read the fact sheet. All ETFs have them, they’re very useful! [https://www.proshares.com/globalassets/proshares/fact-sheet/ProSharesFactSheetBITO.pdf](https://www.proshares.com/globalassets/proshares/fact-sheet/ProSharesFactSheetBITO.pdf)
Prospectus are good too! https://www.proshares.com/regulatory-document-viewer-page?ticker=BITO&document-label=summary-prospectus
Because it is not a Bitcoin ETF… you invested into a bitcoin like ETF that uses futures and swaps to attempt and reproduce the Bitcoin market movements… but it is not a Bitcoin ETF.
Next time, read carefully about the things you invest in… IBIT, FBTC, BTCO, BTCW are all direct Bitcoin ETFs…
Fees and the roll costs of futures.
That being said, the roll costs aren’t as bad as they were. It’s tracking bitcoin much better this year than any year of its existence.
Price will diverge because of distributions – there are fewer of those this year, presumably because of the down year.
It may not be a bad time to take a tax loss if you have it and switch into a spot ETF that’s cheaper, more tax efficient, and will track the bitcoin price more closely.