Summary Volatility Shares 2x Bitcoin Strategy ETF has underperformed bullish expectations, with a -12.3% total return loss over the last 12 months vs. Bitcoin's +25.6% gain. The ETF's poor performance is primarily due to expensive futures contracts and high holding costs, creating significant value decay on top of compounding issues. For long-term Bitcoin investment, direct ownership is recommended over BITX. Keep it simple, with negligible holding and trading expenses. One ETF that has performed relatively well at face value over the last couple of years is Volatility Shares 2x Bitcoin Strategy ( BITX ) . Holding it has piggybacked the extraordinary rise in Bitcoin ( BTC-USD ) since the middle of 2023, on the product's inception. However, returns have not kept pace with the advertised goal of earning DOUBLE the gains of the underlying cryptocurrency, although to be fair, a double in performance "each day" is the official target (which it usually fails to achieve on up days). Volatility Shares Website - 2x Bitcoin Strategy, Fund Description, March 28th, 2025 In fact, total returns have only mimicked the equivalent Bitcoin gain over 21 months with a net +202.1% rise vs. Bitcoin's +188% jump. (BITX does pay a sizable dividend, which is included in my figures.) More typically, in other 2x products available to investors, you would have expected the daily rebalance feature to compound gains far better than simply owning the world's main digital cryptocurrency/security. YCharts - BITX vs. Bitcoin, Daily Total Returns, Since June 2023 IPO Again, to paint a picture of how rotten the total returns have been for buy-and-hold investors, BITX has actually declined by -12.3% over the latest 12-month period vs. Bitcoin's substantial +25.6% advance! YCharts - BITX vs. Bitcoin, 12 Months of Daily Total Returns And, if you like big losses in value over the short run, holding BITX over the past three months has been right up your alley. The total return loss of -24.1% has been more than TRIPLE the equivalent Bitcoin decline of -7.5%. YCharts - BITX vs. Bitcoin, 3 Months of Daily Total Returns What Explains The Weak Performance? The main reason for BITX's poor performance is explained by its futures contract holdings. After a boom in Bitcoin, traders and investors are pricing in large premiums for contracts with deliveries in the future. Below is a list of current ETF holdings, which comprises 2 futures contracts trading at the Chicago Mercantile Exchange [CME], with April and May 2025 dates. Cash as collateral for the futures positioning is also a major holding of the ETF (which is a good thing, earning 4% to 5% annualized yields today). Volatility Shares Website - BITX, Top Holdings, March 28th, 2025 The bad news is the pricing structure to buy and own futures on Bitcoin is quite expensive, as you can see in the table below. This morning the spot Bitcoin is down around -2.1%, but April and May futures are declining by a much larger amount (-2.25% and -2.20% respectively). Then consider 2x Bitcoin Strategy owners have DOUBLE the notational exposure in premium costs to overcome. Effectively, whenever the rollover of capital appears (contracts expire), ETF owners are stuck with another stretched premium bought a few months ahead. So, even flat Bitcoin prices a month or two into the future creates losses for BITX. CME Group - Bitcoin Futures, March 28th, 2025 Reality check: the time premium for futures late in an asset boom is a monster hurdle for BITX trust holders, creating serious decay in value daily. Technical Momentum Fading Another issue I have with BITX in particular is the technical trading momentum pattern. Reviewing the daily chart since its June 2023 IPO, upside buying intensity peaked on most measures in either November (after the national election) or all the way back in March 2024. I have circled in gold, bullish peaks in the 14-day Ease of Movement , 13-day Force Index and traditional Accumulation/Distribution Line . With price back below its 200-day moving average, a serious bear slide could easily play out in the coming months. StockCharts.com - BITX, Daily Price & Volume Changes, Since June 2023 IPO, Author References Final Thoughts I mentioned the ProShares Short Bitcoin ETF ( BITI ) in February here , as the safest way to short Bitcoin, especially in tax-deferred accounts with limits on short sales. Looking at simple performance numbers, owning any short Bitcoin ETF has worked out well since President Trump came to office again on January 20th, 2025. To me this date provided a classic sell-the-news event, after crypto buyers rushed into the marketplace in a frenzy after his November election win (buying the rumor). Promises of a U.S. government crypto reserve may have been fully priced into the market months ago. YCharts - BITX vs. Bitcoin & BITI, Daily Total Returns, Since January 20th, 2025 For those willing to take extra risk, trading through margin accounts, short selling 2x Bitcoin Strategy could put both high futures premiums and a bearish downturn in cryptocurrencies into your pocket. However, I would suggest keeping position sizing small, as Bitcoin has proven extremely volatile with an upward bias over time (defying bears outside of a few dramatic price dumps since 2009). Otherwise, if you are bullish on Bitcoin and desire a long-term holding, I would avoid BITX and stick with direct ownership (with negligible holding expense). The long-term and short-term charts prove the current underlying futures setup, leveraged into double the holding cost of a 1x futures contract, is a huge obstacle to success several years down the road. To boot, this ETF's 1.85% in annual management fees will be something of a drag on performance, the longer you own it. What about the bullish argument to own BITX? You have to believe rip-roaring Bitcoin gains will continue in 2025. While this remains a possibility, the design of the ETF fails to reach its 2x goal for "long-term" holders. When an oversized gain in the underlying security/crypto is required to earn any type of profit, investors are swimming hard against an amazing water current. The odds are you will become exhausted and give up on BITX, when a major Bitcoin sell-off hits. For all of these reasons, I am out. I rate 2x Bitcoin Strategy a Sell and Avoid . Thanks for reading. Please consider this article a first step in your due diligence process. Consulting with a registered and experienced investment advisor is recommended before making any trade.
