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Bitcoin ETF Performs Two Times Worse Than Underlying Asset, Down 19% Against Bitcoin's 9%

Mon, 12/06/2021 - 09:09
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Arman Shirinyan
Bitcoin ETFs once again underperform compared to actual spot pair
Bitcoin ETF Performs Two Times Worse Than Underlying Asset, Down 19% Against Bitcoin's 9%
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According to the CEO of Compound Capital Advisors, Charlie Bilello, Bitcoin futures ETFs are drastically underperforming compared to the spot Bitcoin while being down 19% against the spot's 9%.

On the provided "Returns since inception" chart, two lines reflect the performance of ProShares ETF and the spot Bitcoin trading pair against the U.S. dollar. While two lines move in a complete correlation, the outcome of an investment made in the two assets would highly differ.

Inaccurate calculations

While the CEO of Compound criticized the performance of the futures-backed ETF, Bloomberg ETF analyst Eric Balchunas pointed out the inaccuracy of the data provided. Balchunas said in his tweet that the fund is trailed by 2.5% monthly, which allows it to roll at 10-15% annually instead of 40%.

According to services like Yahoo Finance, the fund in fact trades at approximately a 2% premium compared to the spot asset instead of 10% from data provided by Compound CEO Bilello.


The difference between spot performance and the ETF is explained by the contango, which is a condition in which the price of an underlying asset trades at a discount compared to the price of the same asset's futures.

Here's How Much Bitcoin ETF Underperforms Compared to Spot BTC

With such a difference appearing on the market, exchange-traded funds that are backed with futures instead of an actual spot asset have no other choice but to conclude a new contract for a higher price at the end of each month. The usual premium for ETF investors stays at around 1-2% monthly.

While the futures-backed ETF by ProShares has set the record for one of the largest inflows to the fund in the first days of trading, its performance was far from optimal.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.