Spot vs Futures Bitcoin ETF: The Difference That Costs You Money
ProShares' own annual report shows BITO compounding at −1.39% a year since 2021 while its bitcoin benchmark did +3.98%. Here is where the 5.37 points went, and why altcoins are repeating it.
TL;DR. A spot Bitcoin ETF is a trust that owns bitcoin. A futures Bitcoin ETF is a registered fund that owns contracts and has to replace them every month. ProShares publishes the gap itself: in the annual report to 31 May 2026, BITO compounded at −1.39% a year since its October 2021 launch while the Bloomberg Bitcoin Index did +3.98%, turning $10,000 into $9,375.91 instead of $11,975. The fee is 0.95% of that 5.37-point gap; the prospectus warns that bitcoin's roll spread is "substantially higher" than other futures. Spot funds charge 0.14% to 0.25% and have taken $56.9bn of net new money since January 2024 by our count. The same two wrappers are now confused in XRP, Solana and Dogecoin.
Two wrappers that own different things
"Bitcoin ETF" gets used for anything on an exchange that moves with bitcoin. Two structures hide under the label, and they aren't variants of each other.
- Spot Bitcoin ETFs. Delaware statutory trusts holding bitcoin with a custodian, registered under the Securities Act of 1933 and explicitly not under the Investment Company Act of 1940. Twelve trade in the US, listed in our overview of every US spot Bitcoin fund.
- Futures Bitcoin ETFs. Open-end investment companies registered under the 1940 Act, holding cash-settled futures through a wholly owned Cayman subsidiary. ProShares BITO, listed on NYSE Arca on 18 October 2021, is the one with real assets.
For the primer, see what is a Bitcoin ETF; for ETF versus holding coins, Bitcoin ETF vs spot bitcoin. This page is narrower: given that you want an ETF, which wrapper, and what the wrong one costs.
The comparison, line by line
| Dimension | Spot Bitcoin ETF | Futures Bitcoin ETF (BITO) |
|---|---|---|
| What it owns | Bitcoin in custody | On 22 September 2026: 80.2% CME contracts, 15.3% Coinbase Derivatives, 4.6% a roll-index swap, collateral in a money-market ETF |
| Registration | 1933 Act only. "Not an investment company registered under the Investment Company Act of 1940" (IBIT prospectus) | Both. ProShares Trust is an open-end management investment company under the 1940 Act |
| Offshore subsidiary | None | ProShares Cayman Bitcoin Strategy Portfolio, capped at 25% of assets each quarter end or RIC status is at risk |
| Sponsor fee | 0.14% (MSBT) to 0.25%; GBTC 1.50%, Grayscale mini 0.15% | 0.95%, no waiver |
| Cost beyond the fee | Your own bid-ask spread | Spread plus a compulsory monthly roll |
| Tracking | Spot less the fee, historically within about 25 bp | −1.39% a year since inception against +3.98% for its benchmark, to 31 May 2026 |
| Distributions | None reaches you; the trust sells a sliver of bitcoin monthly to pay the sponsor | Monthly. 12-month yield 38.16% against a 0.31% SEC 30-day yield on 31 August 2026 |
| Tax form | Grantor trust: you're deemed to own the coins, so sponsor-fee sales are your disposals | RIC: a 1099-DIV, short-term slice taxed as ordinary income |
| Schedule K-1 | No | No. It sits in a 1940 Act registrant, not the commodity-pool one |
| Net assets | Roughly $135bn across twelve funds | $1,711,585,049 on 22 September 2026 |
What the roll actually does to a fund
CME bitcoin futures settle in cash against the CME CF Bitcoin Reference Rate. One contract is 5 bitcoin, trading terminates at 4pm London time on the last Friday of the contract month, and six consecutive monthlies plus four quarterlies are listed. Rolling is compulsory: a fund can't let its position settle and hold nothing, so once a month the manager sells the expiring contract and buys a later one. When later-dated futures cost more than nearer ones, a shape called contango, that swap is a sale at the lower price and a purchase at the higher one, and exposure per dollar shrinks even if spot never moves. ProShares says as much in its own risk disclosure: the roll spread on bitcoin is "typically substantially higher than the price difference associated with rolling other futures contracts," and "bitcoin futures have historically experienced extended periods of contango."
You can price the current roll yourself. CME settles on 22 September 2026 were 86,290 for September and 86,770 for October against a reference rate of 86,037.52, so one month cost 0.556%, about 5.8% a year if the curve holds, with the whole strip to December 2027 above spot. It isn't permanent: CF Benchmarks tracked the annualised basis near 25% in February 2024 and below 10% by April 2025, with a brief dip under zero that March. It calls backwardation rare and short-lived, which is the point. The cost isn't symmetrical.
The cost, in ProShares' own numbers
You don't have to model the basis, because the issuer publishes the comparison against a bitcoin index.
| Measure | BITO | Benchmark | Gap |
|---|---|---|---|
| Since inception to 31 May 2026, annualised | −1.39% | +3.98% (Bloomberg Bitcoin Index) | 5.37 points a year |
| $10,000 over that period | $9,375.91 | $11,975 | −$2,599 |
| Year to 31 May 2026 | −32.24% | −29.78% | 2.46 points |
| Calendar 2024 | 105.27% | 122.49% | 17.22 points |
| Since inception to 31 Dec 2024, annualised | 7.76% | 14.01% | 6.25 points |
| Calendar 2022 (third-party total return) | −63.91% | −64.2% (bitcoin) | BITO won by 0.3 points |
| Calendar 2025 against IBIT (third-party) | −11.10% | −6.41% | 4.69 points, of which 0.70 is fee |
Read that honestly. The gaps are total drag, not an auditable roll-cost line item: fee, execution, margin and collateral yield all sit inside them. The 2022 row shows the mechanism running backwards, when bitcoin collapsed, the curve flipped, T-bill collateral paid, and BITO edged ahead of the asset it tracks. The structure is a bet on the curve, not on bitcoin.
The 2025 row is the cleanest like-for-like, the only complete calendar year in which both BITO and a spot ETF existed: −11.10% against IBIT's −6.41%, of which fees explain 0.70 points. ProShares states the conclusion itself: "The performance of the Fund should not be expected to match the performance of spot bitcoin," and "investors seeking a direct investment in bitcoin should consider an investment other than the Fund."
Why the SEC allowed futures first
The order looks backwards until you see what was being approved. A spot trust needed the exchange to file a rule change and the Commission to clear it product by product, and from 2013 to 2023 it refused, saying spot venues couldn't be surveilled. A 1940 Act fund holding CFTC-regulated futures needed none of that. BITO went effective in October 2021 not because the SEC preferred futures but because nothing in the rulebook stopped it. That ended on 29 August 2023, when the DC Circuit held that approving futures while denying spot on the same logic was arbitrary; eleven spot funds opened on 11 January 2024. The decade behind it is in our SEC Bitcoin ETF approval history.
What happened to the futures funds after January 2024
The consensus prediction was an exodus from BITO. It didn't happen, and the fund's own filings say so. Monthly-average net assets from Form N-CEN ran $742.7m in the year to May 2023, $1.599bn in the year straddling the spot launch, $2.175bn to May 2025 and $2.329bn to May 2026. BITO roughly tripled across a period when its reason for existing disappeared.
What died was everything around it. VanEck's XBTF had its last trading day on 30 January 2024, nineteen days after the spot funds opened. Bitwise's BTOP, renamed twice in search of a mandate that worked, closed in May 2026. Hashdex's DEFI converted from futures to spot in March 2024 and shut anyway in August 2026 with $14.7m left.
| Fund | Status | Fee | Assets |
|---|---|---|---|
| Spot ETFs (12 funds) | Trading | 0.14% – 1.50% | ~$135bn, and +$56.94bn cumulative net flow since 11 Jan 2024 |
| ProShares BITO | Trading | 0.95% | $1.71bn (22 Sep 2026) |
| ProShares BITI (short) | Trading | 1.01% | $107.6m |
| CoinShares BTF | Trading | 1.27% | $17.1m |
| VanEck XBTF | Liquidated; last trading day 30 Jan 2024 | 0.76% net | — |
| Bitwise BTOP | Liquidated; last trading day 21 May 2026 | — | — |
| Hashdex DEFI | Converted to spot Mar 2024, liquidated 17 Aug 2026 | 0.25% | $14.7m at close |
The honest read: the futures wrapper survived as a trading instrument and lost the argument as a holding. Spot funds took in more net new money in one strong month than BITO holds in total. Fees on the spot survivors are in expense ratios compared, and daily creations and redemptions are on the Bitcoin ETF flow tracker.
Tax: a RIC that pays ordinary income, or a trust you're deemed to own
This is where most comparisons go wrong, including an earlier version of this one. The usual claim is that a futures ETF hands you Section 1256's 60/40 blended rate. It doesn't, and BITO's own registration statement says so.
Section 1256 applies at the fund level: gains on regulated futures entered into by the Fund are 60% long-term and 40% short-term, marked to market at year end. What reaches you is a distribution, and the same document states that "distributions of net short-term capital gain … will be taxable to shareholders as ordinary income." Only net long-term gain, reported as a capital gain dividend, arrives as long-term. There's no Form 6781 pass-through. Limited-partnership commodity pools do pass 60/40 through on a K-1, which is probably where the confusion started.
ProShares quantifies the damage itself. Since inception to 31 December 2024, BITO returned 7.76% a year before tax and −2.57% after taxes on distributions. Monthly payouts on an asset that generates no income cost a top-bracket holder more than ten points a year of compounding.
The spot side has the mirror-image quirk. You're treated as owning a pro-rata share of the bitcoin, so when the trust sells coins to pay the sponsor, that's your disposal. IBIT's prospectus says each such sale "generally will be a taxable event to Shareholders" and warns you can incur a liability without receiving anything. The amounts are small: Invesco's BTCO put its 2025 total at $0.25863702 per share, and where the §1.671-5 de minimis test is met, as IBIT's 2025 statement says it was, no trust sales proceeds get reported at all. Full treatment is in Bitcoin ETF tax in the USA.
The same confusion is repeating in altcoins
Nobody writing about BITO in 2022 could have warned you about this part. Every altcoin that got a spot ETF in 2025 or 2026 already had non-spot products trading under names that look identical on a broker's search screen. XRP is the clearest case: five spot trusts charging 0.19% to 0.50% and holding about $1.39bn between them, beside tickers holding no XRP at all.
| Ticker | Issuer, listed | Structure | What it holds | Expense | Assets (22 Sep 2026) |
|---|---|---|---|---|---|
| XRPC, XRP, XRPZ, GXRP, TOXR | Canary, Bitwise, Franklin, Grayscale, 21Shares; Nov–Dec 2025 | 1933 Act grantor trusts | XRP in custody | 0.19% – 0.50% | ~$1.39bn combined |
| XRPR | REX-Osprey, Cboe BZX, 18 Sep 2025 | 1940 Act, Form N-1A, Cayman subsidiary | 60.0% spot XRP, 40.0% a European CoinShares XRP ETP | 0.75% | $56.5m |
| XRPI | Volatility Shares, Nasdaq, 22 May 2025 | 1940 Act, Cayman subsidiary | CME XRP futures only. No XRP | 1.68% | $120.6m |
| XRPT | Volatility Shares, Nasdaq, 22 May 2025 | 1940 Act, 2x daily reset | CME XRP futures at about 200% notional | 3.13% | $116.5m |
| TXXH / TXXS / TXXD | 21Shares, Nasdaq; 2025–26 | 1940 Act, 2x daily reset | Leveraged exposure to HYPE, SUI and DOGE | 1.89% management fee | $5.6m – $6.0m each |
| SSK | REX-Osprey, Cboe BZX, 2 Jul 2025 | 1940 Act fund with staking | 53.5% spot SOL, 42.6% a CoinShares staked-Solana ETP, 3.9% JitoSOL | 0.75% | $104.5m |
| DOJE | REX-Osprey, 18 Sep 2025 | 1940 Act, Cayman subsidiary | 59.8% spot DOGE, 40.3% a 21Shares Dogecoin ETP | 1.50% | $13.6m |
Two details make this more than a naming problem. First, the 1940 Act funds aren't all futures funds, and lumping them together is its own error. XRPR genuinely holds spot XRP, but a registered fund can't hold much of a commodity and still qualify as a RIC, so its prospectus commits it to keeping "at least 40% of its assets in securities" and caps the Cayman subsidiary at 25% of assets each quarter end. That's why 40% of your XRPR exposure is a European ETP, and why DOJE and SSK have the same shape.
Second, the leveraged ones decay as theory says. TXXS ran a 1-for-10 reverse split on 6 July 2026 and TXXD did the same effective 4 September 2026, which is what a daily-reset product does once compounding has ground the share price down. None of these tickers appears in our flow data, because cryptoetf.today tracks spot trusts only, across 13 assets.
The pivot that ended the workaround is dated: the SEC approved generic listing standards for Commodity-Based Trust Shares on 17 September 2025, cutting the path to listing from a bespoke rule change to roughly 60 to 75 days. Canary's XRPC came through on 13 November 2025 and the rest followed, as catalogued in every new crypto ETF of 2026. One caution: at least one major outlet reported XRPC itself as a 1940 Act fund, but EDGAR shows only S-1, 8-A12B and 424B3 filings and no N-1A, so it's a 1933 Act trust like the other four.
When a futures fund is still the right instrument
- You're trading the basis. Long spot, short futures, collecting the carry that costs BITO holders money. Two legs and margin, not a position.
- You need leverage in a cash account. A 2x product supplies it without a margin agreement, and resets daily.
- Your platform bars spot products. Some non-US brokers and employer plans list only 1940 Act funds.
- You want short exposure. There's no spot equivalent of BITI.
"I want bitcoin exposure and I'll hold it for years" isn't on that list, and hasn't been since January 2024.
Telling them apart in thirty seconds
The old shortcut was to look for "Strategy" in the name. It's broken: ProShares renamed BITO from Bitcoin Strategy ETF to plain ProShares Bitcoin ETF during 2024. Use these.
- Read the holdings page, not the name. A spot fund publishes a bitcoin balance and often wallet addresses; a futures fund publishes contract months.
- Check the fee. Every US spot Bitcoin ETF except GBTC charges 0.25% or less. Anything at 0.95% or above is a derivatives product.
- Check for a distribution yield. Spot trusts pay nothing. A bitcoin fund advertising a double-digit yield is returning futures gains.
- Check the filings. Form N-1A, N-CSR or N-CEN means a 1940 Act fund; S-1, 10-K and 10-Q mean a commodity trust. That test works for altcoins too, where the names tell you nothing.
To skip the filings, our fund directory lists what each tracked fund holds.
FAQ
What is the difference between a spot and a futures Bitcoin ETF?
A spot Bitcoin ETF is a 1933 Act trust holding bitcoin with a custodian, tracking the price less a fee of 0.14% to 0.25% at most issuers. A futures Bitcoin ETF is a 1940 Act fund holding cash-settled contracts through a Cayman subsidiary, charging 0.95% or more, and replacing them monthly. To 31 May 2026, BITO compounded at −1.39% a year since October 2021 against +3.98% for the Bloomberg Bitcoin Index.
How much does contango actually cost a futures Bitcoin ETF?
No issuer publishes a roll-cost line item, so the honest measure is total drag against a bitcoin index. In BITO's annual report to 31 May 2026 that was 5.37 points a year since inception against a 0.95% fee; to 31 December 2024 it was 6.25 points. Execution, margin and collateral yield sit inside those gaps too. CME settles on 22 September 2026 implied about 5.8% a year to roll one month forward.
Is BITO a spot or futures Bitcoin ETF?
Futures-based. On 22 September 2026 it held CME and Coinbase Derivatives contracts plus a roll-index swap, collateral in a money-market ETF, and no bitcoin. The name misleads because ProShares dropped "Strategy" from it during 2024. The prospectus is blunt: "Investors seeking a direct investment in bitcoin should consider an investment other than the Fund."
Do futures Bitcoin ETFs give you 60/40 tax treatment?
Not at the shareholder level, despite how often that's repeated. Section 1256 applies to contracts held by the fund, so the 60/40 split happens inside BITO. You receive a 1099-DIV, and the prospectus states that distributions of net short-term capital gain are taxable as ordinary income. ProShares' own table shows the effect: through 31 December 2024, 7.76% a year since inception before tax, −2.57% after taxes on distributions.
Did money move from futures Bitcoin ETFs to spot ones after January 2024?
Less than everyone predicted. BITO's monthly-average net assets in its Form N-CEN filings went from $742.7m in the year to May 2023 to $2.329bn in the year to May 2026, growing straight through the spot launch. What collapsed was the rest of the category: XBTF liquidated on 30 January 2024, BTOP closed in May 2026, and Hashdex's DEFI converted to spot and shut anyway.
Can I hold either type in an IRA or 401(k)?
Both are exchange-listed securities and neither issues a Schedule K-1, so both fit in a brokerage IRA. BITO's RIC wrapper also blocks unrelated business taxable income unless the shares are debt-financed under Code §514(b). Availability inside an employer 401(k) menu depends on the plan, not the structure.
Are there futures and 1940 Act versions of the altcoin ETFs too?
Yes, and they launched first. XRPI and XRPT hold CME XRP futures and no XRP; Volatility Shares' SOLZ and SOLT do the same for Solana; 21Shares runs 2x daily products TXXH, TXXS and TXXD on HYPE, SUI and DOGE, two of which have already done 1-for-10 reverse splits. XRPR, SSK and DOJE are a third category: 1940 Act funds holding some spot coin but required to keep 40% of assets in securities, which means European ETPs. None appears in our flow data.
Bottom line
The futures wrapper was a regulatory workaround, and a good one while nothing better existed. It stopped being the right answer on 11 January 2024. BITO still holds $1.7bn and still works as a trading instrument, but as a place to keep bitcoin exposure it has compounded at −1.39% a year since 2021 against its benchmark's +3.98%, and the issuer tells you in writing to buy something else if you want bitcoin. When the next asset gets its own ETF, check the filings before the ticker: the structure that cost BITO holders five points a year is being sold again under new names.
Sources and further reading
- ProShares BITO annual report on Form N-CSR for the year ended 31 May 2026 (since-inception returns, growth of $10,000, contango language): sec.gov. Summary prospectus of 26 September 2025 (fee, before- and after-tax returns to 31 December 2024, roll-cost risk): sec.gov. Holdings and yields: proshares.com.
- ProShares Trust Form N-1A registering BITO, filed 15 October 2021 (1940 Act status, RIC election, the Cayman 25% test, Section 1256, taxation of distributions), and Forms N-CEN to 31 May 2023 through 2026 (monthly-average net assets): sec.gov.
- CME Group specs and settlements for Bitcoin futures: cmegroup.com. CF Benchmarks on the bitcoin basis and the settlement rate: cfbenchmarks.com.
- iShares Bitcoin Trust prospectus and its 2025 §1.671-5 statement: ishares.com. Invesco Galaxy Bitcoin ETF 2025 grantor trust statement: invesco.com. SEC generic listing standards for Commodity-Based Trust Shares, 17 September 2025: sec.gov. Altcoin detail from the REX-Osprey, Volatility Shares and 21Shares fund pages, 22 September 2026.
