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ProShares wants you to short BTC as its flagship ETF tanks

By Daniela Ešnerová

Edited by Aaron Woolner

04:25, 24 June 2022

A coin with BTC logo in red.
ProShares wants you to short BTC as its flagship long ETF tanks Photo: Shutterstock

Asset manager ProShares now lets investors profit from drops in bitcoin (BTC) with its short-based exchange-traded fund BITI. 

Meanwhile its flagship bitcoin-linked ETF, ProShares Bitcoin Strategy ETF, (BITO), which was launched to a great fanfare last October as a first US-listed vehicle of its kind, is 50% down below its all-time high.

ProShares Bitcoin Strategy ETF (BITO)

BITO's listing on the New York Stock Exchange, which was widely seen as a watershed moment for the digital asset sector and an endorsement by Wall Street, sparked a BTC rally which saw the coin hit its then-record high.

Earlier this week, ProShares listed its Short Bitcoin Strategy ETF on NYSE.

“With BITI and its earlier launch of BITO, ProShares is now the first issuer to offer ETFs that provide opportunities when bitcoin increases and decreases in value,” ProShares CEO Michael L. Sapir said in a statement. 

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BITO hit $2bn AUM in two days 

The ETF, which was second-most traded on its debut day, reached £1bn assets under management in just two days. 

After the same time, BITI is far from a similar milestone, having accrued £61m assets under management in the same period.

According to Sapir this demonstrates the ETF’s utility and offers traders much needed shorting capability in the cryptocurrency bear market which has seen rollercoaster price ride for coins BTC and altcoins such as SOL alike.

ETH/USD

3,448.67 Price
+0.950% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

BCH/USD

377.35 Price
-0.200% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

BTC/USD

64,758.05 Price
+0.400% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

DOGE/USD

0.12 Price
-1.460% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

SOL to US dollar 

“The reception that BITI is getting in the market affirms investor demand for a convenient and cost-effective ETF to potentially profit or hedge their cryptocurrency holdings when bitcoin drops in value.”

“BITI can help address the challenge of acquiring short exposure to bitcoin, which can be onerous and expensive for many investors.”

BTC to US dollar 

“Many cryptocurrency exchanges impose stringent restrictions that make it extremely challenging for investors to short spot bitcoin,” Sapir adds.

But commentators noticed that the ETF was launched too late, and the traders may have missed out on gains from the BTC recent crash.

Bitcoin and bitcoin futures are a relatively new asset class and the market for bitcoin is subject to rapid changes and uncertainty. 

Bitcoin and bitcoin futures are subject to unique and substantial risks, including significant price volatility and lack of liquidity. The value of an investment in the ETF could decline significantly and without warning, including to zero.

Markets in this article

BTC/USD
Bitcoin / USD
64758.05 USD
260 +0.400%
SOL/USD
Solana / USD
160.2519 USD
3.0077 +1.930%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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