ProShares CEO Talks Bitcoin Funds | News, Sports, Jobs

In this image provided by ProShares, Michael Sapir, CEO of Proshares, poses for a photo. Courtesy of ProShares via AP

By Stan Choe

AP Business Writer

NEW YORK — Bitcoin’s public profile rose six months ago when the first exchange-traded product linked to it hit the market.

It took just two days for the fund, the ProShares Bitcoin Strategy ETF, to raise over $1 billion. This is even though the fund, which often bears its ticker symbol BITO, does not hold bitcoin itself. Instead, he invests in futures contracts for bitcoin, a regulated market where traders place bets on the direction of the cryptocurrency in the coming months.

But BITO has allowed investors to get involved in bitcoin without having to learn how to hold cryptocurrency.

ProShares CEO Michael Sapir recently spoke to The Associated Press about the fund’s early days, the types of investors it serves, and how bitcoin has failed one. of its first arguments with investors. The conversation has been edited for length and clarity.

Q: What are your personal thoughts on crypto? How important will it be, say, 30 years from now?

A: The truth is, no one knows. My opinion is that in 30 years, cryptocurrencies will either be a central part of the financial system and an integral part of our daily lives, or cryptocurrencies will be a distant memory for most people, and their history will be taught in schools. of business.

Q: Do you personally own any crypto?

A: I personally don’t. But my 15 year old son does. For the past six months, he has been interested in crypto investing, along with his friends.

Frankly, there are some of the more esoteric cryptocurrencies that he taught me a thing or two about.

Q: Did you expect such a big debut like BITO’s?

A: The introduction actually exceeded our expectations. By a fair amount, especially on the first day. We were monitoring the volume traded, from the minute we rang the bell on the New York Stock Exchange.

I was watching the monitor on the floor of the exchange, and every minute after the launch we were seeing tens of thousands, if not hundreds of thousands of shares traded.

Q: Do you have any idea who these investors are? Are they young or old? Large institutions or small investors?

A: We do not have a direct relationship with shareholders, being a stock traded on the New York Stock Exchange.

But about 16% of Americans have at some point purchased a cryptocurrency. We think a large chunk of the remaining 84% are intimidated by the prospect of trying to figure out how to gain exposure to cryptocurrency and don’t want to open a special account to do so and then figure out how to hold crypto. -cash.

Venturing into the world of cryptocurrency can be scary and daunting. We believe that one of the main reasons for BITO’s success is that it has taken away a lot of these complications and fears.

Q: So those buying your fund are completely different from regular crypto investors?

A: Cryptocurrency investors lean more towards people who are willing to be early adopters and take risks.

I think BITO investors are probably similar to these investors, but we think BITO can capture investors who might be hesitant about crypto because they can easily access exposure to bitcoin through an existing brokerage account that they already own and buy it the way they’re used to buying stocks and exchange-traded funds.

One of the benefits we see from BITO is that if you have an IRA, or if you have a 401(k) account that has a brokerage window, you have an easy way to get exposure to bitcoin by buying a funds like BITO.

Q: Previously, the talk of bitcoin was that it protected an investor’s nest egg by not always moving up and down in the same direction as stocks, thus providing diversification. But that has not been the case in recent months. Will it scare people?

A: I think you are right in the very recent past. Bitcoin appears to have correlated with stock movements. I don’t know if it’s a permanent condition. And there have been significant periods in the past where bitcoin has performed without correlation to stocks and bonds.

There seem to be two types of investors in cryptocurrencies. The first type are long-term holders who believe the value of the cryptocurrency will increase in value and will hopefully provide an element of diversification for their portfolio. And the second type of investor is a short-term investor who doesn’t care whether they’re correlated to another security or diversifying a portfolio. They try to take advantage of short-term movements in the cryptocurrency markets.

Q: One of the criticisms of BITO is that it invests in bitcoin futures, not bitcoin itself. Do you think customers understand the distinction?

A: In our communications, we have made it clear that BITO invests in bitcoin futures, not directly in spot bitcoins. That said, there has been a correlation of around 0.99 with spot bitcoin in futures since our launch, and the performance since our launch has been close to spot bitcoin itself.

Copyright 2022 The Associated Press.

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