VettaFi’s vice chairman Tom Lydon discussed the ProShares Bitcoin Strategy ETF (BITO) on this week’s “ETF of the Week” podcast with Chuck Jaffe of “Money Life.”
Bitcoin has been moving in interesting directions recently, making BITO a timely play.
“We’ve seen a nice trend here, Chuck, and it’s interesting. When you look at the inception of this ETF, it’s actually down 75%,” Lydon said. “However, if you look at year to date, this ETF and Bitcoin itself is up almost 70% off of the recent lows, so it’s encouraging.”
Lydon said bitcoin has demonstrated it’s not going away, earnings a role as its own asset class and something worth paying attention to. As the fund moves above its 200-day moving average, it’s worth consideration.
“When you look at trends, and you look at alternatives to what’s going on in the equity markets, the fixed income markets, currencies, banking, there’s also an opportunity to diversify and have non correlated assets as well,” Lydon said. “So with all that in mind, having an ETF regardless of what it covers, or regardless what its name is, if it goes above its [moving] average, this is something to consider for your portfolio.”
BITO notably does not offer exposure to spot bitcoin but rather bitcoin futures, as the SEC has not approved spot bitcoin or cryptocurrency ETFs. SEC Chairman Gary Gensler approved a futures-based strategy as the CFTC futures are regulated, enhancing the products reception with regulators.
“And guess what? it’s worked,” Lydon said. “Even though it’s been down this much, it has been exactly correlated with the performance of Bitcoin — and that’s what everybody wanted.”
According to Lydon, the idea here is that, with BITO and bitcoin going above its 20-day moving average, investors have the opportunity to buy in low with the ability to protect themselves if it turns around and dips below its trendline.
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