The underperformance stems from the costs associated with the fund’s structure. BITO does not purchase tokens, instead it holds BTC futures contracts on the Chicago Mercantile Exchange (CME). The fund must roll over the contracts every month as they expire, making it vulnerable to the price difference between terms. If next month’s contract trades at a premium to the nearest expiry – a phenomenon called contango and typical during a bull market – over a sustainable period, the fund will compound losses due to the “contango bleed.”
Related posts
-
Dogecoin Price Chart Flashes Clean Bull Flag At $0.38, Here’s The Next Target
Este artículo también está disponible en español. The Dogecoin price has recently exhibited a classic bull... -
Bitcoin hits record highs, but the next big profits could lie in these 5 cryptos
Disclosure: This article does not represent investment advice. The content and materials featured on this page... -
Bitcoin MVRV Metric Signals Market Heating Up—Here’s What Investors Should Know
Meet Samuel Edyme, Nickname – HIM-buktu. A web3 content writer, journalist, and aspiring trader, Edyme is...