Photo by Spencer Platt/Getty Images
- Overall demand was big for the debut of the first bitcoin-futures ETF, but retail investors contributed less than institutional buyers, says Vanda Research.
- Retail buyers bought $7.68 million shares of the ProShares BITO ETF, behind Coinbase's launch at $57 million.
- Individual investors prefer buying single stocks rather than ETFs, said the firm.
The first bitcoin-futures exchange-traded fund logged near-record high demand on its launch day but participation by retail investors was lackluster, according to Vanda Research.
The ProShares Bitcoin Strategy ETF, which debuted Tuesday, was the second-most heavily traded fund debut ever, landing turnover of nearly $1 billion with more than 24 million shares exchanged, according to Bloomberg data. ProShares reportedly said its new ETF brought in $570 million in assets in its launch day.
Retail investors bought $7.68 million in BITO shares on Tuesday, but that's well below the high-profile debut of Coinbase in April, when they bought seven times more of the crypto exchange's stock, at $57 million, said Vanda Research in a note Wednesday. Its VandaTrack tool monitors retail-investing activity in 9,000 individual stocks and ETFs in the US.
"[Most] pundits interpreted the massive trading volumes as a roaring success for BITO. From retail investors' perspective, it wasn't as much of a blockbuster," wrote Vanda analyst Giacomo Pierantoni and senior strategist Ben Onatibia.
They said the overall massive demand for BITO, an ETF that invests in bitcoin futures contracts rather than the actual digital currency, was likely from a combination of investment advisors, private banking clients, and funds shorting the ETF to gain from the contango. Contango is a market condition where prices for futures contracts are higher than the spot price.
Retail "investors are probably aware of the 'contango trap' which makes BITO a subpar instrument to gain exposure to bitcoin," said Vanda. "The cost of rolling futures contracts and high management fees can result in a 10%-20% underperformance relative to bitcoin, according to Bloomberg estimates."
Meanwhile, individual investors prefer buying single stocks rather than ETFs except when they buy the dip in broad-market ETFs like QQQ or SPY, the researchers said.
The popular Invesco QQQ Trust tracks the Nasdaq 100 Index of large-cap growth stocks including Apple, Microsoft and Tesla. The SPDR S&P 500 trust tracks the S&P 500 and is the largest ETF, with about $402 billion in assets under management, according to ETF Database.
Bitcoin during Wednesday's session rose nearly 3% to trade above $64,470, approaching its all-time high of $64, 804.72.