Specializing in Bitcoin Volatility! Bitcoin leverage and shorting ETFs are here

wallstreetcn ·  Apr 3 21:18

After the Bitcoin Spot ETF, the enhanced version is also here.

The crypto asset bull market driven by the launch of Bitcoin spot ETFs is still not over, and Wall Street has introduced leveraged and shorting ETF products, once again igniting the enthusiasm of the market.

On Tuesday, ProShares, a well-known financial product issuer, launched$PROSHARES TRUST ULTRA BITCOIN ETF (BITU.US)$und$PROSHARES TRUST ULTRASHORT BITCOIN ETF (SBIT.US)$. The former aims to track the 2x daily earnings performance of the Bloomberg Bitcoin Index, while the latter tracks the index's decline. The annual fee for both ETFs is 0.95%.

Michael Sapir, CEO of ProShares, said that BITU leveraged funds give investors “an opportunity to pursue increased Bitcoin returns or target exposure levels with less risk capital.” SBIT funds, on the other hand, “allow investors to profit or hedge their Bitcoin positions when the price of Bitcoin falls.”

In the first quarter of this year, after the regulatory green light was given, nearly ten ETFs that directly invest in spot bitcoins have emerged. These ETFs have attracted 12 billion US dollars in inflows and a total asset size of nearly 60 billion US dollars. ProShares's new ETF product can be viewed as an enhanced version of the Spot Bitcoin ETF, which can provide amplified returns around spot Bitcoin.

The huge inflow of capital into the ETF sector highlights investors' enthusiasm for spot Bitcoin ETFs, and also reflects the growing popularity of ETFs as a frictionless trading tool. More related products are on the way, such as the newly transformed HashDex Bitcoin ETF (DEFI) and the Grayscale Bitcoin Mini Trust, which is currently being approved.

Michael O'Riordan, founding partner of ETF consulting firm Blackwater, told the media:

This shows how ETF managers are opportunistically trying to make the most of positive sentiment.

After regulators approved spot Bitcoin ETFs, new products sprung up to provide investors with a channel to lay out crypto assets. Whether Bitcoin is bullish or bearish, these products can meet the needs of all kinds of investors to lay out crypto assets.

Matt Maley, Miller Tabak's chief market strategist, believes it's only a matter of time before leveraged ETFs are launched, but they may be a double-edged sword:

On the negative side, these ETFs could increase speculative trading in this already volatile asset class. But they can also help investors hedge their positions, so they may offset some of the speculative activity. Overall, it should continue to attract more investors into this asset class.

The sharp fluctuation in the price of Bitcoin explains the popularity of leveraged and shorting Bitcoin investment tools in the market. Although Bitcoin has fallen by about 10% since hitting a high in mid-March, it has accumulated a cumulative increase of nearly 50% since this year. It marks Bitcoin's exit from the dark period of 2022. The thunderstorm in the coin industry caused Bitcoin to drop 64% throughout the year, making it the second-worst annual performance in history.


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