ProShares is all set to launch an exchange-traded fund (ETF) that is designed to short the world’s largest digital currency. It will effectively allow investors to bet against Bitcoin, a strategy that certainly seems lucrative given the market's recent track record. The ETF will be traded on the New York Stock Exchange and will be listed as BITI.
BITI will be the first short-ETF to be launched in the USA. Canada has a similar one called Horizons ETF, which is listed on the Toronto Stock Exchange. The rollout announcement comes just eight months after the launch of ProShares’ Bitcoin Futures ETF (ticker – BITO), which was another first for the US stock market.
ETFs can track the performance of several assets, including an entire sector, a particular index or an individual asset, such as Bitcoin. They can be traded on an exchange just like regular stocks. BITI is designed to invert the S&P CME Bitcoin Futures Index movement, which means that when Bitcoin futures contracts fall, BITI will rise. This will benefit investors in two ways — they can potentially profit from a Bitcoin price plunge and hedge risk with exposure to multiple cryptocurrencies.
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"As recent times have shown, bitcoin can drop in value," said ProShares CEO Michael L. Sapir in the official press release. "BITI affords investors who believe that the price of bitcoin will drop with an opportunity to potentially profit or to hedge their cryptocurrency holdings. BITI enables investors to conveniently obtain short exposure to bitcoin through buying an ETF in a traditional brokerage account."
According to Bloomberg, crypto fund investments soared from $24 billion at the end of 2020 to $63 billion by the end of 2021. However, Bitcoin has already plunged 70 percent from its all-time high of $69,000. Bitcoin is currently trading at $21,485.29. So, the main question here is, has the launch come a tad bit too late and do investors really stand to gain from this?
When the ProShares Bitcoin Futures ETF was launched in October 2021, it managed to garner $1 billion in just two days but soon became one of the worst-performing ETFs as the crypto market crashed. But BITI might be lucky as the cryptosphere is wary of further rate hikes by the US Federal Reserve, whose latest 75 bps hike was the largest in 3 decades.
Should US inflation continue to give headaches to the Federal Reserve, further rate hikes and price cuts can be expected in the future. And this is exactly what BITI is designed to gain from.
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