BITO: Rate Cuts Are Beneficial, Plus High Income (Rating Upgrade)
Summary
- ProShares Bitcoin Strategy ETF has faced about a 13% loss since July, but rate cuts and Chinese stimulus have triggered an upside.
- Loosening of monetary policy could help Bitcoin miners adapt faster to the post-halving landscape, which may stabilize the hash rate and profitability.
- Lower interest rates can also reduce miners' operating expenses, encouraging them to hold rather than sell Bitcoin, thus supporting higher asset prices.
- BITO offers a unique high-yield strategy through Bitcoin futures with a high dividend yield, despite share price volatility and income not increasing smoothly like for dividend growth ETFs.
- Capital appreciation is lower than for spot ETFs due to the income strategy, but dividends paid have tripled from 2023 to 2024, while there has been no capital erosion during this period.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of BITO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
This is an investment thesis and is intended for informational purposes. Investors are kindly requested to do additional research before.
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