ProShares Plans ETF, Mutual Fund Betting Against Bitcoin

The fund group’s latest planned offerings would seek inverse returns to the CME Bitcoin Futures Contracts Index


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key takeaways

  • The ProShares Bitcoin Strategy ETF (BITO), which launched in October, has $1.3 billion in assets
  • The SEC asked ETF issuer Direxion to withdraw its application for its proposed Bitcoin Strategy Bear ETF last year

ProShares has revealed plans to bring to market an ETF that would offer investors the ability to bet against bitcoin following the launches of bitcoin futures and metaverse ETFs in recent months.

The ProShares Short Bitcoin Strategy ETF would seek investment results corresponding to the inverse — -1x — of the return of the CME Bitcoin Futures Contracts Index for a single day, according to a Tuesday disclosure.

While the fund plans to invest primarily in bitcoin futures contracts, it may invest in money-market instruments, such as US Treasury bills and repurchase agreements.

ProShares is also seeking to launch a mutual fund with the same name and investment strategies, a separate disclosure indicates. The filings do not indicate tickers or expense ratios for the proposed products.

A ProShares spokesperson declined to comment beyond the filings.

The firm in October launched its Bitcoin Strategy ETF (BITO), which was the country’s first ETF to invest primarily in bitcoin futures contracts. Priced at 95 basis points, BITO has slowly grown to $1.3 billion in assets after an initial jump to about $1 billion during its first day of trading.

Shortly after BITO’s launch, ETF issuer Direxion filed to launch a Bitcoin Strategy Bear ETF to offer managed short exposure to CME bitcoin futures contracts. The Securities and Exchange Commission requested for the filing to be withdrawn.

Nate Geraci, president of The ETF Store, told Blockworks he sees no reason why the SEC shouldn’t approve ProShares’ proposed fund, adding that he expects plenty of demand for the product.

“With the SEC having already blessed ETFs holding CME-traded bitcoin futures, why shouldn’t ETFs exist that short those same futures?” he said. “The current long-only bitcoin futures ETFs have also worked exactly as intended, which is likely to offer some additional comfortability to the SEC.”

Switzerland-based 21Shares launched its Short Bitcoin ETP (SBTC) in January 2020. Horizons ETFs Management, headquartered in Canada, launched the BetaPro Inverse Bitcoin ETF (BITI) on the Toronto Stock Exchange in April 2021.

ProShares has 142 ETFs trading in the US with combined assets under management of roughly $70 billion, according to data.

In addition to BITO, the company launched a Metaverse ETF last month. The ETF tracks an index comprising 40 companies, including device makers and data processors, as well as social media and gaming platforms.

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