According to a press release, investment giant ProShares will launch a new bitcoin-linked exchange-traded fund (ETF) in the United States. The firm behind the first BTC ETF in this country under the ticker BITO, will launch the short bitcoin strategy under BITI.
Related Reading | Cryptocurrencies Fuel Growth in High Net Worth Population, Survey Shows
This investment vehicle will be available on the New York Stock Exchange (NYSE) tomorrow, June 21, and will inversely track the price of BTC from the S&P Chicago Mercantile Exchange (CME) BTC Futures Index. In other words, if the price of BTC moves down, investors will profit.
Market participants are expecting further losses as the number one cryptocurrency recently traded below its 2017 all-time high of $20,000 and given the current macro-economic environment. The new ProShares ETF will provide these investors with an opportunity to profit from the bearish trend.
In that sense, the press release claimed, BITI aims to address the “challenge of achieving low exposure to bitcoin”. The investment firm claims that this process can be “difficult and costly for many investors” in the United States.
In particular, investors in this country may face obstacles when trying to short bitcoin futures-linked products. The US regulatory environment makes this harder than in the rest of the world, but ProShares strives to provide a solution.
Short positions are often used by long-term holders of certain assets to hedge their long positions against future downside. That’s why this new investment vehicle can provide a solution for investors looking to protect their holdings. Company CEO Michael Sapir said:
BITI provides investors who believe the price of bitcoin will fall with a potential profit opportunity or to hedge their cryptocurrency holdings. BITI enables investors to easily obtain low exposure to bitcoin by purchasing an ETF in a traditional brokerage account.
The Dangers of Shorting Bitcoin with ProShares
The new BTC Short ETF will not be physically fixed and will be non-diversified. Investors will only have exposure to the price of BTC in the futures market. As the firm explained, at times the spot price of BTC and its future price can be different.
This may create some hurdles for the investors. Similarly, the ETF will strive to reach a daily target of 1X for its BTC-based strategy. This could generate compounding gains for investors, but it could also cause them significant losses, ProShares warned.
Related Reading | Dogecoin Jumps 8% After Elon Musk Tweets He’s Buying Dips
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 BitX. Sapir concluded:
With the addition of BITI and BITIX, ProShares and ProFunds will be the only fund family in the US to offer funds that allow investors to express their views on the direction of bitcoin – whether they believe the price will go up or down.