Okay so everyone with a tech blog this week is writing about the new MacBook Pros. The 14 and 16 inch ones, M1 Pro and M1 Max, notch on the screen that people are mad about, the Touch Bar finally gone (good riddance, I never once used it for anything besides accidentally brightening my screen with a stray thumb). I'm not doing that post. Every single outlet already has it covered six ways from Sunday and I don't have a review unit anyway, I have a 2019 Intel MacBook Pro that fans up like a leaf blower whenever I open more than four Chrome tabs.
What I actually want to talk about is something that happened kind of quietly in the middle of all that Apple noise: on Tuesday the 19th, the first US bitcoin ETF started trading on the NYSE. Ticker BITO, run by ProShares. It had one of the biggest ETF debuts ever, something like a billion dollars in assets within two days, which I think is a record or close to one. Bitcoin itself pushed up near $66,000 the day after launch, which was a new high at the time.
Now here's the thing that nobody seems to be saying loudly enough: this isn't actually a bitcoin ETF in the sense most people think. BITO doesn't hold bitcoin. It holds bitcoin futures contracts, the CME kind, which means it's tracking the price of contracts betting on where bitcoin will be, not the coin itself. There's a difference and it's not a small one. Futures-based funds have to roll their contracts every month, and depending on the market that rolling can quietly bleed value over time even if the underlying asset does fine. People buying BITO in their brokerage account thinking they now own "a piece of bitcoin" are going to be surprised eventually when the fund doesn't track the spot price exactly. It also comes with a 0.95% expense ratio, which is not nothing.
I get why it exists this way and not as a spot ETF. The SEC has been saying no to spot bitcoin ETFs for years now over custody and manipulation concerns, and futures products are regulated under different rules that let them slide through. So this is Wall Street getting a bitcoin-adjacent product it's allowed to sell, not actual bitcoin exposure. Valkyrie's version launched a few days after on Nasdaq too, ticker BTF, same futures structure. I wouldn't be shocked if more of these show up before the year's out, all doing the same futures dance.
Small personal aside here: I bought something like 0.4 bitcoin back in early 2013 as a joke, mostly so I could write a post on this very blog about "trying weird internet money." It cost me something like $50 at the time. I genuinely forgot the wallet existed for about four years and when I finally dug up the file I had a mild panic attack trying to remember the password. I got it eventually (it was written on a sticky note stuck inside an old external hard drive box, extremely secure system, I know). Anyway that coin fraction is worth an amount of money now that I'm not going to type out here because it makes me feel a specific combination of smug and sick, but the point is I've watched this asset go from "thing nerds joke about" to "product a regular Fidelity account can hold" over eight years, and it still doesn't feel real to me even watching it happen.
What strikes me about BITO isn't really the price action, it's what it signals. When something gets wrapped into an ETF with a normal ticker symbol that shows up next to SPY and QQQ on your average trading app, it stops being a weird internet thing and starts being a line item. My dad, who has never once asked me about bitcoin in eight years, texted me Tuesday night asking if he should buy some through his brokerage. That's the actual story here, more than the fund itself. Not the mechanics of futures contracts rolling monthly. The fact that the thing crossed over into "my dad's brokerage app" territory in the space of one Tuesday afternoon.
I don't have a tidy takeaway on whether this is good or bad. I think it's probably fine as a product for people who want exposure without dealing with a crypto exchange, and I think the expense ratio is annoying, and I think most people buying it don't understand the futures roll mechanic and won't until it costs them something. All three of those things are true at once and I'm not going to pretend otherwise just to wrap this up neatly.