(Markets Insider) JPMorgan strategists are warning that the newly launched ProShares Bitcoin Strategy ETF could grow so big, leading to poor performance in the future.
JPMorgan says the contango in the ETF curve affects performance due to roll yield, higher than the product’s management fees that could increase with more assets.
The strategists warn that the ETF should constantly roll over bitcoin futures contracts to the subsequent month to manage futures closely related to Bitcoin price movements.
The cost of rolling over futures contracts has ranged around 9% since 2019, which is ten times the ProShares Bitcoin Strategy ETF’s annual expense ratio of 0.95%.
The ProShares Bitcoin Strategy ETF, which currently has 25% open interest in Bitcoin futures contracts, has applied a CME waiver to increase the current 4000 futures contracts ceiling. If the application is not granted, the ETF will have to invest in equities exposed to cryptocurrencies to track bitcoin prices.
BTCUSD is down -1.79%.
