Are you wondering why your ProShares Bitcoin ETF underperforms BTC by so much? You\'re not alone. Many investors are noticing the difference between the performance of Bitcoin itself and the ProShares Bitcoin Strategy ETF (BITO). The price of ProShares’ Bitcoin Strategy ETF (BITO) has risen 47% year-to-date, trailing BTC’s 60% gain over the same period, K33 Research noted.

According to a report by K33 Research, ProShares\' Bitcoin Strategy ETF (BITO) has been underperforming BTC this year due to the costs associated with its structure. ProShares\' bitcoin futures exchange-traded fund is increasingly underperforming BTC this year, diminishing its appeal as a vehicle for betting BTC’s price appreciation, according to digital assets analysis firm K33 Research.

The ProShares Bitcoin ETF underperforms due to high costs and complexity, making it a potentially less attractive investment compared to newer, lower-cost ETFs that directly hold Bitcoin. These costs are largely attributed to the way BITO operates. ProShares Bitcoin Strategy ETF (the Fund) seeks investment results, before fees and expenses, that correspond to the performance of bitcoin, but achieving this perfectly is difficult.

Specifically, the underperformance stems from hidden costs of rolling futures contracts every month as they expire called the “contango bleed,” exacerbated by this year’s rebound in BTC price. This "contango bleed" significantly eats into potential profits, especially during periods of strong Bitcoin price appreciation.

Therefore, while the ProShares Bitcoin Strategy ETF (NYSE ARCA: BITO) might seem like a convenient way to gain exposure to Bitcoin, it\'s crucial to understand its inherent limitations. If you believe the value of BTC will push higher, consider the underperformance and higher costs compared to holding BTC directly or exploring other investment options. Remember, The ProShares Bitcoin ETF underperforms due to high costs and complexity, making it a poor investment compared to newer, lower-cost ETFs.