28 Jun 2022

ProShares short BTC ETF becomes second-largest U.S BTC ETF in just four days

The first inverse BTC ETF launched in the U.S. last week, and it’s already become the second-largest bitcoin-related BTC ETF in the U.S. after four days of trading.
Source: ProShares, Valkyrie, VanEck
ProShares’ short bitcoin ETF (BITI) launched last Tuesday, June 21st, and has already seen substantial inflows. The ETF shorts bitcoin and seeks a return that is -1x the benchmark (BTC) for a single day. Compound effects will lead to underperformance vs. a -1x short during upside volatility, and the ETF is not meant to be a fund for holding long-term exposure.The BITI launch was relatively slow, but inflows grew on Thursday. As of June 27th, BITI holds a net short exposure equivalent to 939 BTC. Meanwhile, Valkyrie’s BTF ETF holds an exposure equivalent to 840 BTC, while VanEck’s ETF holds an exposure equal to 830 BTC, meaning that BITI became the second-largest U.S. bitcoin-related ETF less than one week after its launch.
ProShares - The Definite Top Dawg in the U.S. BTC ETF market
Now, ProShares is managing the two largest BTC ETFs in the U.S., with ProShares’ BITO dwarfing all other ETFs, holding an exposure equivalent to 32,715 BTC as of June 27th.
Source: ProShares
Inverse BTC ETF meets criticism, but its a natural progression
The SEC approval of an inverse bitcoin ETF, while denying spot ETFs has been met by criticism. However, given the SEC’s approval of futures-based long ETFs, it seems natural that the SEC also approved a futures-based ETF enabling investors to express bearish views in the market as well. This should contribute to improving the market efficiency by enabling easy access to both long and short bitcoin. This week, Bitwise will receive its verdict on its spot-based ETF filing. While an approval seems very unlikely at the moment, Bitwise CIO Matt Hougan expressed that the introduction of an inverse ETF is a promising development, adding that spot ETFs will come in due time as the regulatory framework improves.
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