Assessing BITO One Year In

that turned out. My colleagues Voldanna Harrick and Katie Greifeld, who recorded this episode before FDx filed for bankruptcy, explain why so many people thought this launch would mark the beginning of a bull market in bitcoin, and now over to my colleagues. Around this time last year, the very first bitcoin linked exchange traded fund debut, the pro Shares Bitcoin e t F, which trades under the ticker b I t O. The launch marked a milestone for the

digital assets industry. It opened up the opportunity for more mainstream investors to dip their toes into cryptocurrencies. The et F had a stellar start. It was the second most heavily traded fund on record, and it gathered more than one billion dollars in ousets in record time. And back then bitcoin was trading it around sixty five thousand dollars a coin, and retail investing in crypto was booming. But

in hindsight, the timing was a little bit unfortunate. Just two months after its debut, Bitcoin started to crash, and soon after that a collapse of crypto hedge funds and stable coins helped bring its value down to twenty tho dollars a coin. Joining me now is Bloomberg reporter Katie gar felt. Biddo was the top Biddo. Whether it caused the top is a different story, but it pretty much marked the top back by popular demand is Katie Greifeld,

a Bloomberg reporter and one of my teammates. Katie, welcome back to the show. It is a joy to be here. I know that the popular demand was just you, but I appreciate it nonetheless. No, actually, you and I got some tweets. We got one tweet how dynamic we are together? That it was one tweet and it was you, But it was not How sad would that beat? Okay? So I want I don't want to give us too much like patting on the back too much kudos go on,

but I have to go on. You and I actually were the reporters who broke the story about the biddo launch last year. It was in October, So I want you to think back to that time, set the scene for us. What was the excitement like around crypto in general, and then also about this idea that we were going to have this Bitcoin futures e t F as asset manager.

Pro Shares is poised to launch the first Bitcoin futures e t F battle trade under the stambole b i t O. It will invest primarily in bitcoin futures contracts, not it directly in bitcoin. Because halcyon days of October, there was a lot of excitement around even though it was not what the industry, both the crypto industry and the e t F industry really wanted. The Holy grill. There is a spot bitcoin e t F, but this was the debut of the futures backed bitcoin e t F.

Pro Shares was first of the punch there. They launched about a year ago and there was just a lot of excitement. Sort of the bull narrative was that this is going to introduce so many new investors to the space because you haven't seen a strung ture like this in the US before the launch of the first bitcoin et f is the latest sign of crypto becoming even more mainstream than it already is. So does that mean it's just a matter of time before everyone has some

digital assets in their wallet? You do have spot bitcoin ETFs in Canada, in Europe. You don't have anything like that in the US. And again, it wasn't the best case scenario, but there was a lot of optimism nonetheless,

and a lot of it panned out. At least day of week, of month of I think this was one of the best e t F debuts on record in terms of first day volume, how quickly it got to a billion dollars in a u M. But that feels like a long time ago, and then the excitement around that also just before we get it does feel like a long time ago, because we want to talk about what's going on in the present as well. But the excitement around the launch also helped propel bitcoin to all

time highs and a bunch of other tokens all time highs. Right, oh yeah, big time. I mean, I think Bitcoin's all time hunt was a breath below six and one thousand dollars happened at the same time as you saw this launch, So it was just a time of real optimism in the stock market too. It felt like risk assets of every stripe were rallying all at once and Bitcoin was leading the charge. There would then lead the charge to the downside as well. But again, what a fun time

we had. It was God, So can you set the scene for us what's with in terms of what's going on today and how the mood music has shifted, and especially the crypto crash that we saw earlier in the year, and then we had a big downturn over the summer. Then we had sort of range bound trading for bitcoin and other tokens, and then this new crash around worries with different um crypto ex changes. So Biddo was the

top Biddo. Whether it caused the top is a different story, but it pretty much marked the top and it's been

really rocky sledding since then. To to your point, Uh, we actually wrote another great story that yeah, the FED tightening, it was going to basically prove whether or not it was all a bubble because as a mainstream asset class, I mean, if you think about when the FED was tightening, when it's tightening cycle stopped back in, bitcoin was a much less mature asset class in terms of the scale, the different players involved, its reach. So it's been really

rocky since then. Mostly I think the macro backdrop most people would agree, but there's been a lot of pain at at sort of the corporate level in the crypto world. I mean, you think about what happened with Tarot, you think about what happened with algorithmic stable coins. So just in one year from the launch of the futures Bitcoin et F, the setup is dramatically different. Now up next more with Bloomberg reporter Katie Greifeld on the future of

bitcoin ETFs. We'll be right back. So one of the things I love to talk about is how excited crypto investors get about announcements like this one, or any other announcement or anything new within the space that sort of helps propel prices upward. And what's happened with this fund and and a few other futures funds is that those investors have stayed excited and they've been adding money to these e t f s, right, So these ETFs have actually these funds have seen inflows even as prices have

been crashing. That's the thing. I mean, you haven't seen a mass exodus necessarily from the likes of Biddoh, even though it's one of the worst performing non leveraged e t F s around. Would be hard to find a

fund that's doing worse than it. But the stickiness of the inflows that have come in, and we ran some sophisticated analysis on the blue numinal well cumulative inflows into this product even one point eight billion dollars, and we're still talking about outflows, but none to the extent that we've seen in terms of money coming in. So people

are hanging on. And it's also the case with some of the other bitcoin futures et f that have launched in the US, but they're much much smaller because in the e t F space, I mean, you live and die by that first mover advantage. You read my mind. This was my next question, wavelengths bouncing the stud Can the people feel it? Can the people at home feel it? So tell us about first move advantage? What is it

in the e t F world? How important is it and how did it help differentiate Biddle from some of its competitors. So I said that pro Shares was first to the punch here, and they were. You saw this real arms race of e t F fishuers trying to get their applications at the door of the SEC. Pro Shares was able to launch their product first, by far the biggest. I still believe that they have over six hundred million dollars in assets. The number may change, but uh,

that's because they were first out the door. If you think about the likes of the Valkyrie bitcoin strategy e t F, it's the same thing virtually. It's also tracking bitcoin futures. It was just a day or two later. I believe twenty million dollars in match different or somewhere around there. Yeah, so the first mover advantage. And it's not just crypto, I mean, this is a feature of the e t F market. The biggest oldest et F out there is State Street Spy, which is just the

SMP five hundred. Uh dude too, and it's really become a fixture of financial markets, even though it's relatively expensive. It costs nine basis points oh my gosh, which again doesn't sound like that much. But then you compare it to similar front funds from black Rock, from Vanguard that costs three basis points and still Spy is the biggest just because it's the oldest. Yeah, I love this. I love these topics. I love the E t F world and crypto. Okay, one big, big, this is the biggest

question out there. I'm really nervous. I know you should be. Yeah, okay, drum maybe we can get a drum roll from the producers. But I didn't post. You mentioned that we don't have a bitcoin spotty TF. We don't. When are we getting one? You know, it just feels like it doesn't feel like a SEC under the purview of Gary Gensler, that it's at the top of the priority list or anywhere near

the top. Even though the Bitcoin Futures e t F, even though it's down a lot since launched, it's performed perfectly fine, and the structure exactly we talked about the role costs. I haven't been anywhere close to what's feared. We haven't seen really any market structure issues come of the Bitcoin Futures at e t F. But it just feels there's nothing, nothing that Gary Gensler has said that would suggest that the SEC stands is going to budge

on spot bitcoin e TF. We had a big moment for again both industries, both e t F n crypto with gray scales E t F conversion application, the gray Scale Bitcoin trust, which isn't just not a exactly they would like it to be in e t F. They applied with the SEC to convert it into an e t F. The SEC denied that application in July. Gray Scale is now currently suing the SEC. So that's sort of the thing to watch in this timeline of when

we might get spot bitcoin et F approval. But again there's just been nothing to suggest that Gary Gensler has budget on this. It's kind of amazing. FED speak is a thing. Watching the FED is a thing watching Jerome pal every listening to the speakers right exactly. Yeah, And it feels like the et F and the crypto industry do that as well for Gary Gensler and doesn't feel like the message at the top has changed at all.

He did have a somewhat snippy Halloween oh sweet about bitcoin, right, congratulating bitcoin and turning four team, Yeah, something like that. He called it the Crypto white Paper, though not the Bitcoin white paper, and that got a lot of them's. Yeah, he knows what he's doing. Yeah, don't quote me on that. No, I won't. But you and I are giving the people what they want, and maybe gay Againstler will one day give the crypto people what they want. I would imagine

he's listening. Hello, Gary, Well, anyway, thank you so much for joining us today. I'm so happy you came back. This was thrilling for me too. You can find more of our reporting on the Bloomberg Terminal and on Bloomberg dot com, and for more, be sure to check out our twice weekly newsletter, Bloomberg Crypto. This is Bloomberg Crypto,

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