ProShares to Launch First US ETF For Shorting Bitcoin

Key Insights:

• The BITI short Bitcoin strategy ETF will go live on June 21.
• It allows investors to speculate on the falling price of BTC.
• There is still no sign of SEC approval of a spot-based Bitcoin fund.

ProShares, the largest provider of Bitcoin-based ETFs in the United States, has lined up another fund which it is readying for launch on June 21.

The ProShares Short Bitcoin Strategy ETF, which will trade on the New York Stock Exchange under the ticker BITI, provides a way for investors to profit from a decline in the price of Bitcoin (BTC). The fund has been designed to overcome the challenges of getting short exposure to the price of the world’s largest digital asset.

According to the June 20 announcement, BITI will deliver the inverse of the performance of the S&P CME Bitcoin Futures Index.

Shorting Bitcoin

Short selling is a strategy that speculates on an asset’s falling price. Bitcoin prices have fallen by 70% over the past six months, so it wouldn’t be a bad strategy in a bear market. Aside from using derivatives such as this ETF, there is no other way to short Bitcoin other than physically selling it and waiting for the price to drop before rebuying. However, institutional investors don’t like to “get their hands dirty” buying crypto directly.

ProShares CEO, Michael Sapir, said that recent times have shown how much Bitcoin prices can drop. “BITI enables investors to conveniently obtain short exposure to Bitcoin through buying an ETF in a traditional brokerage account,” he added.

The firm’s affiliated mutual funds provider, ProFund, aims to launch a similar product in mutual fund format called BITIX on June 21. Sapir added:

“With the additions of BITI and BITIX, ProShares and ProFunds will be the only fund families in the U.S. offering funds that allow investors to express their view on the direction of bitcoin—no matter whether they believe the price will go up or down,”

ProShares launched the first Bitcoin-based ETF in the United States in October 2021. The highly anticipated BITO fund generated more than $1 billion in investment in just a couple of days, becoming the most successful ETF launch in industry history.

The performance of the fund has since tanked along with the price of BTC, with a current daily volume of $143 million and $668 million in assets under management. BITO has returned -53.6% since the beginning of the year.

SEC Spot Procrastination

All the current funds available in the U.S. are based on futures contracts and are not backed by the physical asset. There is great demand for a spot-based crypto fund, but the Securities and Exchange Commission has other ideas with its repeated rejections and decision delays.

Analysts have concluded that SEC Chair Gary Gensler has an anti-Bitcoin agenda.

So there’s now a SHORT Bitcoin ETF, a Futures ETF, a closed end fund trading at a 30%+ discount, a 401K option for Bitcoin, but NO Spot ETF.

It is clear that @GaryGensler and the SEC have an agenda against Bitcoin.

— Will Clemente (@WClementeIII) June 20, 2022

Earlier this year the world’s largest crypto fund manager, Grayscale, mulled a lawsuit against the regulator for its repeated rejections of a spot Bitcoin fund.