How to buy ProShares Bitcoin Strategy ETF (BITO)?

After years of speculation, the first Bitcoin ETF is here. ProShares Bitcoin Strategy ETF (BITO) is now live and trading on Stake with US$0 brokerage fees. Investors can now access the largest cryptocurrency on the market through their equities portfolio.

This article focuses on how to buy specific securities, however it is not a recommendation to invest in them and should not be taken as financial advice. Do your own research and make your own decisions, or even consider getting advice from a licensed financial adviser before investing.

Key highlights:

  • ProShares Bitcoin Strategy ETF (BITO) was the first cryptocurrency ETF approved by the U.S. Securities and Exchange Commission (SEC).
  • BITO and BITI allow investors the ability to trade U.S. ETFs that follow the rise and fall of Bitcoin futures.
  • When BITO launched, it became the second most traded ETF in market history.

ProShares has a history of being first to market. In October 2021, it was the first firm to list a Bitcoin futures ETF. On its launch, $BITO became the second most traded ETF in market history as it reached US$1b in market inflows. This launch was soon followed by Bitcoin hitting an all-time high of around US$68,900 in the subsequent weeks.

However with Bitcoin currently trading around US$20,000, investors will be hoping the listing of $BITI does not have a similar effect on the world’s largest crypto in reverse.

What is ProShares Bitcoin Strategy ETF (BITO)?

The ProShares Bitcoin Strategy ETF is an ETF that tracks Bitcoin futures rather than Bitcoin itself. Issued by ProShares, the ticker symbol is known as BITO.

On its first day of trading, $BITO saw over US$1b of total volume. It instantly became the second most traded ETF to debut in market history. With US$1b in inflows, $BITO became the quickest ETF to reach that market.

It is not uncommon for an ETF to follow an asset's futures. Commodity ETFs often track futures rather than physical assets. Investor should note that Bitcoins are not regulated and the usual protections associated with traditional ETFs do not apply to the underlying Bitcoins. While this means the price of the ETF and Bitcoin will not correlate exactly, it was the only way such an offering could make it to market at the stage of release.

Following the launch of BITO, in May 2022 the Australian ETFs known as $EBTC and $EETH launched on the ASX. With these assets following the price of each coin instead of the futures price like BITO. Find out more on how to buy EBTC on the ASX.

👉 Learn more about how to buy the spot Bitcoin ETFs in Australia

How to buy ProShares Bitcoin Strategy ETF (BITO)?

The first crypto-based ETF was approved for U.S. markets and available to trade on NYSE from 20 October 2021. Head to the app or desktop site, search ‘BITO’ to find the instrument page, or follow the steps below to invest in BITO.

  1. Download the Stake mobile trading app or sign up on your desktop - If you’re ready to jump into the markets, create your account with Stake and sign in.
  2. Fund your Stake Wall St account - Go to the Funds and Balances screen, and make a deposit into your account. See all the payment methods available.
  3. Search for BITO - Find the crypto ETF by searching for the name ‘ProShares Bitcoin Strategy ETF’ or simply by the ticker symbol ‘BITO’.
  4. Click ‘Buy’ and choose your order type - Select either a ‘Marker order’, ‘Limit order’ or ‘Stop order’, the amount you’d like to buy and place the trade.
  5. Monitor your investment - You now hold a position in BITO. Monitor your investment and the performance of this ETF.

How does BITO work?

A typical equity ETF will hold stocks on their balance sheet. For instance, Cathie Wood’s ARK Innovation ETF (ARKK) will hold Tesla shares on their books and adjust their position as more funds flow in and out of the ETF. Every US$1 you invest in the ETF will correspond to real shares in different companies.

The BITO ETF will not buy Bitcoin, rather it buys and sells Bitcoin futures. The main reason is that the SEC regulates the futures exchanges. Without a crypto exchange having sufficient regulatory oversight, such a structure protects investors from potential manipulation and risks associated with unregulated crypto exchanges. This is a huge development for many funds and investors who are mandated to invest in certain markets and exchanges.

Moreover, derivatives like options markets will be created with $BITO as the underlying asset, providing more options and sophistication for professional investors.

What is the difference between the BITO and BITI ETF?

The difference between BITO and BITI is that BITO trades long contract positions and BITI trades short contract positions. With BITI being a short ETF, it means investors can profit from falling prices in Bitcoin and allows them to hedge against Bitcoin as a part of their strategy.

Both Bitcoin ETFs are linked to bitcoin futures traded on the Chicago Mercantile Exchange (CME).

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