Thursday, June 30, 2022

ProShares Wants You to Short Bitcoin Through Its New ETF

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Key Takeaways

  • ProShares will launch the first Bitcoin short ETF on Jun. 21.
  • The ETF will allow investors to hedge their crypto holdings or potentially profit from Bitcoin price drops.
  • Bitcoin is currently trading 70% down from its all time high.

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ProShares just announced the launch of a new Bitcoin futures ETF that will allow investors to “conveniently” profit from price drops. The company was the first to offer a Bitcoin futures ETF in October 2021. 

ProShares Launches Short Bitcoin ETF

ProShares is launching the first Bitcoin short ETF. 

According to a Monday press release, the ProShares Short Bitcoin Strategy (BITI) will give investors a mechanism to hedge their crypto exposure or profit from Bitcoin price drops. The ETF is designed to deliver the opposite performance of the S&P CME Bitcoin Futures Index, and it’s set to launch on Jun. 21. 

Shorting is a trading strategy that involves selling an asset on the market with the expectation of buying it at a lower price in the future. Investors “go short” when they believe that an asset will fall in value. In crypto trading, those who are short trade on the expectation that Bitcoin could fall in price.

“As recent times have shown, Bitcoin can drop in value,” ProShares CEO Michael Sapir said in the press release. Bitcoin is trading at around $20,600 at press time, down about 70% from its $69,000 peak recorded in November 2021. Sapir said that the ETF would help investors take advantage of Bitcoin’s price volatility by letting them “conveniently” obtain short exposure. 

ProShares will also launch a short Bitcoin mutual fund (BITIX) on the same day through its affiliated mutual fund company, ProFunds. BITI and BITIX share the same investment objective.

ProShares memorably launched the first Bitcoin-based ETF in the U.S. in October 2021, letting investors direct gain exposure to the top crypto through a traditional stock exchange for the first time. Available under the ticker BITO, the firm’s Bitcoin futures ETF drew more than $1 billion from investors in its first two days.

Crucially, all of ProShares’ ETFs maintain exposure to Bitcoin through futures contracts. The Securities and Exchange Commission has to date thwarted all efforts from various companies to launch a Bitcoin spot ETF in the U.S. Crypto investment firm Grayscale is currently campaigning for the SEC to allow it to convert its Bitcoin private trust (GBTC) into such a product, but the SEC has not yet reached a decision. 

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.

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