"BITO provides Bitcoin exposure through futures contracts rather than holding the cryptocurrency directly. This structure allows the ETF to trade in standard brokerage accounts and qualify for retirement accounts, solving a practical problem for investors who want crypto exposure without setting up digital wallets or navigating exchanges. The return engine relies on rolling Bitcoin futures contracts, selling expiring contracts and buying new ones each month. When futures prices exceed spot prices (contango), this rolling process bleeds value."
"The return engine relies on rolling Bitcoin futures contracts, selling expiring contracts and buying new ones each month. When futures prices exceed spot prices (contango), this rolling process bleeds value. BITO's 0.95% expense ratio adds another cost layer. Together, these structural drags explain why BITO has underperformed Bitcoin by a staggering margin in 2025, even as the cryptocurrency declined only modestly year-to-date."
Bitcoin fell about 25% from its November 2025 peak to roughly $87,300, while ProShares Bitcoin Strategy ETF (BITO) declined about 52% year-to-date from $23.74 to $12.16. BITO gains crypto exposure via Bitcoin futures contracts rather than holding spot Bitcoin, enabling brokerage trading and retirement account eligibility. The ETF repeatedly rolls monthly futures contracts; contango (futures priced above spot) forces selling low and buying high, producing persistent negative roll yield. BITO's 0.95% expense ratio adds explicit costs. Volatility magnifies tracking error, producing much larger losses for BITO than for spot Bitcoin over 2025.
Read at 24/7 Wall St.
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