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The ProShares Ultra Bitcoin ETF (NYSEARCA:BITU) launched in April 2024 promising twice Bitcoin’s daily return. That sounded appealing when Bitcoin climbed toward $105,000 in November 2025. But as Bitcoin fell below $88,000, BITU investors discovered the harsh reality of leveraged crypto exposure. The fund collapsed 37% year-to-date through late December, significantly worse than Bitcoin’s 17% decline from its peak. Understanding why it underperformed so dramatically matters more than timing the bottom.
The Futures Curve Is Working Against You
BITU doesn’t own Bitcoin directly. It uses Bitcoin futures contracts to create 2x leverage, and those futures trade in contango when near-term contracts are cheaper than longer-dated ones. Every time BITU rolls expiring contracts into new ones, it sells low and buys high, creating persistent drag called roll decay. This wasn’t a problem during Bitcoin’s 2024 rally when positive momentum overwhelmed friction costs. But in choppy or declining markets, contango becomes an anchor.
The CME Bitcoin futures curve spent much of late 2025 in backwardation during the worst selloff, which helped limit damage. But as markets stabilize, the curve typically reverts to contango. Monitor the CME Bitcoin futures term structure weekly through the CME Group website. When the front-month contract trades at a discount to contracts three or six months out, BITU bleeds value with each roll. In 2026, if Bitcoin trades sideways while futures stay in contango, BITU could lose money even if Bitcoin goes nowhere.
Daily Resets Compound Against You in Volatile Markets
BITU resets its 2x leverage every single day, creating volatility decay. If Bitcoin drops 10% one day and rises 10% the next, you don’t break even. The math: a $100 investment in Bitcoin falls to $90, then rises to $99. But BITU’s 2x exposure drops to $80, then recovers only to $96. That 4% gap is volatility decay, and it compounds relentlessly.
Bitcoin’s November collapse saw daily swings exceeding 5% regularly, with RSI touching 26 on November 21 before bouncing. Those violent moves are when daily resets hurt most. Track this by comparing BITU’s performance to exactly twice Bitcoin’s return over any period longer than one day. The gap reveals the fund structure’s cost. ProShares publishes daily performance data on its website, and the prospectus explains reset mechanics in detail.
The 0.98% expense ratio adds another drag, though it’s less significant than structural issues. For 2026, watch Bitcoin’s realized volatility. If it stays elevated above 60%, BITU will likely underperform even a 2x leveraged position that doesn’t reset daily.
Consider FBTC for Cleaner Bitcoin Exposure
The Fidelity Wise Origin Bitcoin Fund (NYSEARCA:FBTC) offers a simpler approach. It holds actual Bitcoin, not futures, eliminating contango risk entirely. The 0.25% expense ratio is 73% cheaper than BITU, and there’s no daily reset mechanism to create volatility decay. FBTC won’t double Bitcoin’s gains, but it won’t amplify losses or bleed value in sideways markets. For 2026, when Grayscale and other analysts expect Bitcoin to potentially reach new highs but with continued volatility, FBTC provides exposure without the structural handicaps that made BITU a wealth destroyer in 2025.
The Verdict
Heading into 2026, BITU’s performance hinges on whether Bitcoin futures contango returns and whether Bitcoin can rally strongly enough to overcome daily reset decay. Unless you expect a sustained, low-volatility Bitcoin rally, the structural costs make it more falling knife than opportunity.