This investment vehicle will be available tomorrow June 21 at the New York Stock Exchange (NYSE) and will inversely track the BTC’s price from the S&P Chicago Mercantile Exchange (CME) BTC Futures Index. In other words, investors will profit if BTC’s price trends to the downside.
As the number one cryptocurrency recently traded below its 2017 all-time high at $20,000 and given the current macro-economic environment, market participants expect further losses. The new ProShares ETF will provide these investors with an opportunity to profit from the bearish trend.
In that sense, the press release claims, BITI is aimed at addressing the “challenge of acquiring short exposure to Bitcoin”. The investment firm claims this process can be “onerous and expensive for many investors” in the United States.
In particular, investors in this country could face hurdles when trying to short Bitcoin Futures-linked products. The U.S. regulatory environment makes it harder than for the rest of the world, but ProShares attempts to provide a solution.
A short position is often used by long-term holders of certain assets to hedge their long positions against future drawdowns. This is why this new investment vehicle could provide investors with a solution to protect their holdings. The company’s CEO Michael Sapir said:
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.
The new BTC short ETF will not be physically settled and will be non-diversified. Investors will only have exposure to BTC’s price in the futures market. As the firm clarified, there could be times when BTC’s spot price and its future price are different.
This could create some hurdles for investors. Similarly, the ETF will attempt to reach a daily goal of 1X for its BTC-based strategy. This could create compound gains for investors, but could also lead them to suffer significant losses, ProShares warned.
The investment firm will also launch a BTC short mutual fund. Called Short Bitcoin Strategy ProFund, this investment vehicle will be launched tomorrow under the ticker BITIX. Sapir concluded:
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.
