Shares of ProShares Bitcoin Strategy ETF (BITO) dropped 3.4% to $10.24 on September 15 as a brutal combination of surging bond yields, elevated crude prices, and pre-Fed anxiety triggered broad selling across crypto-linked assets. For holders of the largest Bitcoin futures ETF, the session crystallized a painful reality: when the cost of holding risk-free government bonds rises this sharply, the appetite for speculative assets like cryptocurrency evaporates fast. BITO Drops 3.4% as 5% Treasury Yields and $108 Oil Collide With a Looming Fed Hike — Is There Any Floor for a Crypto ETF in a Rising-Rate World?
Shares of ProShares Bitcoin Strategy ETF slid 3.4% to $10.24 as a perfect storm of macro headwinds hammered speculative assets. The 10-year Treasury yield hit 5% on Tuesday, rising for the fifth consecutive session as elevated oil prices fueled inflation concerns ahead of an expected interest rate hike by the Federal Reserve this week.
Bitcoin itself fell to roughly $76,874 , dragging BITO — a fund that holds Bitcoin futures contracts rather than the cryptocurrency directly — squarely into the sell-off.
Five-Percent Yields Give Investors a Reason to Dump Crypto
The 10-year yield rose to 5.04% on September 15, marking a 0.05 percentage point increase from the prior session — its highest level since July 2007. When the U.S. government pays investors more than 5% a year risk-free, the incentive to hold a volatile, non-income-producing asset like Bitcoin shrinks dramatically. BITO has delivered a total return of -34.88% over the past year , a painful contrast to the guaranteed yield now available in Treasuries. Fund flows reflect the exodus: BITO has seen $250.9 million in net outflows over the past three months alone.
Oil Above $108 Is Pouring Fuel on the Inflation Fire
Brent crude rose toward $108 a barrel, a four-month high, after Saudi Arabia shut a major pipeline following drone attacks.
Over the past month, Brent's price has surged 19.2%. Higher energy costs feed directly into consumer prices, making it harder for the Fed to justify keeping rates steady — and harder for risk assets like crypto to attract capital.
The Fed Meeting Starting Today Could Deliver the First Hike Since 2023
With the labor market steady and energy prices keeping inflation elevated, it's widely expected that the Federal Reserve will vote to raise the federal funds rate for the first time since 2023.
The current rate stands at 3.50%–3.75%, and after Chair Kevin Warsh's hawkish Jackson Hole speech, markets have priced a move to 3.75%–4.00% as more likely than not. A confirmed hike tomorrow would tighten financial conditions further, adding yet another headwind for BITO holders.
A Futures-Based Structure Adds Hidden Costs in a Downturn
BITO invests in futures and swaps and does not directly invest in Bitcoin. That means it pays a rolling cost each month as expiring contracts are replaced — a drag that compounds during prolonged sell-offs. With $1.66 billion in assets and a 0.95% expense ratio , shareholders face structural decay on top of Bitcoin's spot losses. Until Treasury yields retreat or the Fed signals a pause, the math for holding BITO remains punishing.