A New Player in the Bitcoin ETF Game
In an exciting twist for those who think they’ve figured out the wild rollercoaster that is Bitcoin, ProShares has just launched a new exchange-traded fund (ETF) designed specifically for investors looking to bet against the price of the cryptocurrency. Beginning Tuesday, this Short Bitcoin Strategy ETF, dubbed BITI, will be trading on the New York Stock Exchange (NYSE). Who knew we’d see a financial product so ready to throw shade at Bitcoin?
What is BITI and How Does it Work?
So how does this nifty little investment vehicle work? BITI allows investors to use futures contracts to short Bitcoin based on its daily performance metrics, as computed by the Chicago Mercantile Exchange Bitcoin Futures Index. This means that if you believe Bitcoin’s price is going on a downward spiral—perhaps a gut feeling from the market—BITI is your chariot into the sunset of potentially profiting from that dip.
Say Hello to Your New Hedge!
Michael Sapir, the CEO of ProShares, passionately states, “BITI affords investors who believe that the price of Bitcoin will drop with an opportunity to potentially profit or to hedge their cryptocurrency holdings.” In essence, if you’re holding onto some Bitcoin but have an inkling it’s about to faceplant, BITI gives you a chance to soften the blow. Just be ready for the metaphorical tilting of the hat to the classic Wall Street wisdom: “What goes up must come down!”
The Bitcoin Market’s Rollercoaster Ride
It’s a wild time for cryptocurrencies right now. As of last Saturday, Bitcoin experienced a woeful drop beneath $18,000, a value not seen since 2020! But like a good old-fashioned drama series, it bounced back up, making it over $20,000 once more by the time this information graced our eyes. Ether, not wanting to be left out, also had its share of distress, dipping below $1,000—an 18-month low!
A History of Bitcoin ETFs
Speaking of drama, let’s not forget the saga of Bitcoin ETFs in the U.S. ProShares led the charge in 2021 with its Bitcoin Strategy ETF, a gamechanger that introduced futures-based investing in Bitcoin to the mainstream. At first, shares were priced at $40, but thanks to the rip-roaring highs and gut-wrenching lows of cryptocurrencies, they have plummeted over 68%. Now, they’re sitting at a precarious $12.72. Who needs reality TV when we’ve got this soap opera unfolding daily?
To Spot or Not to Spot: The U.S. ETF Dilemma
While it may seem that the U.S. is lagging behind in the availability of spot Bitcoin ETFs, it’s primarily due to the consistent reluctance of the SEC to approve investment vehicles that offer direct exposure to cryptocurrencies. Instead, we’ve watched ETFs tied to Bitcoin futures slip through the approval cracks since 2021. It’s like trying to make a blockbuster movie only to get stuck on the pilot episode!
