Fund profiles
BITO — the ProShares Bitcoin Strategy ETF
BITO was the first US Bitcoin ETF and holds futures, not bitcoin. Here is the roll cost worked through, the performance record, and the narrow cases where it still makes sense.
BITO deserves respect for what it was and scepticism about what it is. From October 2021 to January 2024 it was the only way to get bitcoin exposure through a US brokerage account, and it did that job. Then spot funds arrived at a tenth of the cost, and BITO became a product with a much narrower purpose than most of its remaining holders probably realise.
The key facts
| Field | Value |
|---|---|
| Ticker | BITO |
| Full name | ProShares Bitcoin Strategy ETF |
| Sponsor | ProShares |
| Launched | 19 October 2021 — the first US Bitcoin ETF |
| What it holds | Cash-settled CME bitcoin futures contracts |
| Expense ratio | 0.95% |
| Estimated all-in annual drag | ~2.9%, per one 2026 analysis (fee plus roll) |
| Structure | Registered fund, Investment Company Act of 1940 |
| Counterparties | Clearing house and futures commission merchant |
| Suitable for | Short-horizon tactical positions |
Roll cost varies with the shape of the futures curve and is not a fixed number. It is a market price the fund accepts on every rebalance, not a charge it levies.
What it actually holds, and why that matters
A spot Bitcoin ETP buys bitcoin and holds it. Nothing expires, nothing needs replacing, and the only ongoing cost is the sponsor fee.
BITO buys futures contracts — agreements referencing bitcoin's price at a future date, settled in cash. Those contracts have expiry dates. To keep exposure alive, the fund must continually sell the expiring contract and buy a later-dated one. It does not take physical delivery, and it never touches bitcoin.
Everything expensive about this product follows from that single fact. The full comparison is in spot vs futures Bitcoin ETFs.
Roll cost, in numbers
Suppose bitcoin trades at $77,000. The contract expiring this month trades near $77,000 too, since at expiry it must converge on spot. The contract expiring next month trades at $77,600 — traders pay a premium for deferred exposure because a futures position ties up less capital than owning the asset.
The fund's position expires. It sells at $77,000 and buys the next month at $77,600. Bitcoin has not moved a dollar, and the fund now controls slightly less exposure for the same money. That gap — roughly 0.78% here — is roll cost. Repeat every cycle and it compounds.
The condition where later contracts cost more than nearer ones is contango, and it has been the normal state in crypto for most of the market's history. The reverse, backwardation, hands the fund a small tailwind — but it typically appears in panics, when you are least likely to be initiating a long position.
The performance record
The theory predicts persistent underperformance against spot bitcoin, and the record matches. In the period to March 2026, BITO was down 29.93% while spot bitcoin was down 27.05% — nearly three percentage points of underperformance in a falling market, from a product whose entire purpose was to track the thing that fell less.
A March 2026 breakdown put it plainly: BITO's structure incurs roll costs and carries a higher expense ratio at 0.95% against spot funds at 0.20% to 0.25%. That combination, one analysis concluded, makes it poorly suited to extended holding periods.
| Measure | BITO | Spot fund (e.g. MSBT / IBIT) |
|---|---|---|
| Underlying holding | CME futures contracts | Bitcoin at a qualified custodian |
| Stated fee | 0.95% | 0.14% – 0.25% |
| Roll cost | Recurring, positive in contango | None |
| Estimated all-in drag | ~2.9% a year | Roughly the sponsor fee |
| Ten-year fee cost on $10,000 | ~$1,020 before roll cost | ~$149 – $265 |
| Tracking over years | Lags spot by fee plus compounding roll | Lags spot by roughly the fee |
Illustrative arithmetic on a flat balance, for comparison rather than projection. Fee figures from issuer disclosures; drag estimate from published 2026 analysis.
Why it existed first
BITO's early arrival was a regulatory artefact, not a market preference. The SEC was willing to approve bitcoin exposure through CME futures — a regulated, surveilled derivatives market with position limits and a clearing house — years before it would approve a fund holding spot bitcoin, whose underlying market it argued was vulnerable to manipulation.
That inconsistency became the legal lever that ended the deadlock. Grayscale argued the SEC could not rationally permit a futures-based Bitcoin ETF while refusing a spot one on the same reasoning; in August 2023 the DC Circuit agreed; spot approvals followed in January 2024. So BITO's existence is part of why spot funds exist at all. See the approval timeline.
No expiry, no roll, no contract to replace
Bitcoin itself has no expiry date and no annual fee. A licensed exchange lets you hold it directly — CEX.IO is registered with FinCEN as a money services business, licensed for money transmission across US states, and authorised by the Gibraltar Financial Services Commission as a DLT provider.
Where it still fits
Three narrow cases hold up, and it is worth naming them rather than dismissing the product entirely.
- Short-horizon trades. Roll cost accrues over months. Over a few days it is negligible, and futures products often carry heavy volume and deep options markets.
- Platform constraints. Some retirement plans, advisory platforms and non-US brokerages permit 1940 Act registered funds but not 1933 Act commodity trusts. Where that is the binding constraint, a futures fund may be the only compliant route.
- A view on the curve. If you specifically expect backwardation, the roll works in your favour. This is a professional position, not a retail one.
For a holding you intend to keep for a year or more, none of these apply, and a spot fund delivers the same exposure for a fraction of the cost.
If you still hold BITO from before 2024
This is the situation worth acting on, and it is quiet enough that people miss it. There is no fee spike and no bad news — just a gap against spot bitcoin that widens slowly.
In a retirement account, switching to a spot fund has no tax consequence and the cost saving is immediate and permanent. There is very little to weigh.
In a taxable account, selling realises your gain or loss. Run the arithmetic: the tax bill today against an estimated 2.6 percentage points a year of saved drag over your remaining holding period. Given the size of that annual difference, a long horizon favours switching more strongly here than it does for someone weighing GBTC's 1.50% — see the GBTC page for the parallel calculation, and Bitcoin ETF taxes for the mechanics.
A related note on ProShares' other products: BITI targets -1x the daily performance of bitcoin and SBIT -2x, both via futures and swaps, and both reset daily. They are explicitly short-term trading tools rather than holdings — see how to short a Bitcoin ETF.
Our take from the desk
If we had to name the single most expensive avoidable mistake in this whole category, it would be holding a futures Bitcoin fund for years without understanding why it kept falling behind. Nothing about it looks broken from the outside. Anyone still sitting in BITO from before January 2024 should at least run the comparison against a spot fund and their own tax position — it is the highest-value ten minutes available to them.