Retail Traders Mum On ‘BITO’

Vanda Research estimates just $15.46 million in Tuesday's bitcoin ETF debut were from retail.

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Reviewed by: Dan Mika
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Edited by: Dan Mika

The first bitcoin-linked ETF generated more than $1 billion in volume on its debut on Tuesday, but barely any of it was generated by retail traders.

VandaTrack, a firm that estimates retail trading flows for securities and ETFs, estimates that $15.46 million of the volume around the ProShares Bitcoin Strategy ETF (BITO) came from self-led accounts. The firm also estimated those accounts added a net $7.68 million out of the approximately $570 million that ProShares claims to have gained in assets on the launch.

In a note, VandaTrack analysts Ben Onatibia and Giacomo Pierantoni said retail traders tend to gravitate toward single stocks except when they use broad market ETFs to buy market dips. Instead, they believe the intense trading action was generated by advisors, private banking clients and shorts using the ETF to profit off the contango situation.

Onatibia and Pierantoni also blamed the muted retail interest in BITO on the futures structure of the fund, which adds additional costs of ownership versus a physically held bitcoin ETF or buying the coin directly.

“The cost of rolling futures contracts and high management fees can result in a 10-20% underperformance relative to bitcoin,” they wrote.

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Dan Mika is a reporter for etf.com. He has previously covered business for the Ames Tribune and Cedar Rapids Gazette in Iowa, and BizWest Media in Fort Collins, Colorado. Dan holds a bachelor's degree in journalism from Truman State University.