Ben Strack

<div id="highlights-block_62b0c1e09a8ea" class="highlights">
 <ul>
 <li>ProShares launched the first bitcoin futures ETF in the US in October</li>
 <li>Horizons ETFs Management’s BetaPro Inverse Bitcoin ETF on the Toronto Stock Exchange is up roughly 80% year to date</li>
 </ul>
 
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Looking to profit from an extended downturn in cryptocurrency markets, an ETF that bets against bitcoin is set to start trading Tuesday in the US.



Run by fund issuer ProShares, the Short Bitcoin Strategy ETF (BITI) is designed to deliver the inverse of the performance of the S&amp;P CME Bitcoin Futures Index via bearish bitcoin futures. The company is dubbing it the first short-bitcoin ETF in the US.



The company is also set to launch a mutual fund, the Short Bitcoin Strategy ProFund (BITIX). Neither fund will invest in bitcoin or other cryptocurrencies directly.



The launches come as bitcoin traded just below the key resistance level of $20,000 on Monday at 2:30 pm ET, reflecting a drop of nearly 60% so far this year — and about 30% in the last month.



“As recent times have shown, bitcoin can drop in value,” ProShares CEO Michael Sapir said in a statement. “BITI affords investors who believe that the price of bitcoin will drop with an opportunity to potentially profit or to hedge their cryptocurrency holdings.”



Canada-based Horizons ETFs Management launched the <a href="https://www.horizonsetfs.com/ETF/BITI" target="_blank" rel="noreferrer noopener">BetaPro Inverse Bitcoin ETF</a> on the Toronto Stock Exchange in April 2021. The fund, which has $45 million in assets, was up roughly 80% year to date.



“This ETF isn’t exactly launching at the best time, given that bitcoin has already experienced significant carnage,” said Nate Geraci, president of The ETF Store, of the ProShares offering. “That said, I expect this product to find an audience among traders looking to play the high-volatility nature of bitcoin.”



Sapir said the company now allows investors to express their view on the direction of bitcoin in more ways than one.



The ETF issuer, which manages about $56 billion, was the first in the US to bring to market an ETF focused on bitcoin futures. The ProShares Bitcoin Strategy ETF (BITO), which launched last October, gathered roughly $1 billion in assets within <a href="https://cms.blockworks.co/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading/" target="_blank" rel="noreferrer noopener">its first day of trading</a>. The fund is down about 30% in the last 30 days and 56% since the beginning of 2022. 



Amplify Investments’ Transformational Data Sharing ETF (BLOK), the largest blockchain ETF in the US with about $540 million in assets, is down 54% so far this year and about 15% in the past month.



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ProShares To Launch First US ETF That’s Bearish on Bitcoin

<div id="highlights-block_61a547b87f773" class="highlights">
 <ul>
 <li>The Ethereum network will be an integral part of our lives going forward, says Kelly Intelligence’s founder and CEO </li>
 <li>VanEck and ProShares had revealed plans in August to launch Ethereum futures products but subsequently withdrew the applications</li>
 </ul>
 
</div>



Kelly Intelligence is looking to launch an Ethereum futures ETF a little more than a month after the first bitcoin futures ETFs hit the US market.&nbsp;



The Denver-based firm’s proposed actively managed fund would invest in cash-settled ether futures contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission (CFTC), according to <a href="https://www.sec.gov/Archives/edgar/data/1873280/000089418921008363/kellyethereumfuturesetf485.htm">a regulatory disclosure</a> filed on Monday.&nbsp;&nbsp;



The only such exchange to offer these contracts is the Chicago Mercantile Exchange (CME), which rolled out ether futures contracts earlier this year after unveiling bitcoin futures contracts in December 2017.&nbsp;



CME earlier this month announced that it would <a href="https://cms.blockworks.co/cme-group-plots-launch-of-micro-ether-futures/">add micro ether futures</a> — sized at one-tenth of one ether — on Dec. 6.&nbsp;



CME Group executives said at the time that the micro ether futures offering would provide an efficient, cost-effective way for individual and institutional investors to hedge their ether price risk or more nimbly execute ether trading strategies. The plans came as liquidity in ether futures contracts has steadily grown among institutional traders since their launch in February, the CME leaders added.



<blockquote class="wp-block-quote">“Kelly Intelligence’s interest in ether is predicated on the fact that we are at the start of the fourth industrial revolution &#8211; what we call the intelligence revolution — where the Ethereum network will be an integral part of our lives going forward,” Kevin Kelly, the firm’s founder and CEO, told Blockworks in an email.</blockquote>



Kelly declined to comment specifically on the filing or potential conversations the firm has had with regulators.&nbsp;



The planned Kelly Ethereum Ether Strategy ETF may replace futures contracts approaching expiration with similar contracts that have a later expiration, the filing notes.



In addition to ether futures contracts, the fund may invest in pooled investment vehicles and exchange-traded products that provide exposure to ether. It would not invest in ether or other digital assets directly.



Penserra Capital Management is slated to subadvise the fund. The filing does not indicate an expense ratio for the proposed offering.



<h3 class="wp-block-heading">Bitcoin futures ETFs</h3>



The filing follows the launch of several bitcoin futures ETFs. The first of which, the ProShares Bitcoin Strategy ETF (BITO), has grown to roughly $1.4 billion in assets under management since its Oct. 19 debut. The US Securities and Exchange Commission (SEC) has not yet greenlit ETFs that would invest in bitcoin directly.



VanEck and ProShares had revealed plans in August to launch <a href="https://cms.blockworks.co/vaneck-and-proshares-apply-for-ethereum-futures-etfs/">Ethereum futures products</a> but subsequently <a href="https://cms.blockworks.co/vaneck-proshares-seek-to-withdraw-requests-to-launch-ethereum-etfs/">withdrew the applications</a>. Some industry professionals said at the time that the SEC likely told the issuers that such products would not be approved any time soon.



Trey Griggs, CEO for GSR’s US business, <a href="https://cms.blockworks.co/when-could-an-ethereum-futures-etf-hit-the-us-market/">told Blockworks last month</a> that he believed Ethereum had sufficient trading history for the SEC to approve a futures-based product. But the market for ether futures is likely not liquid enough to support the volume of inflows that an ETF could trigger, Noelle Acheson, head of market insights at Genesis, said at the time.&nbsp;



Bloomberg Intelligence ETF Analyst James Seyffart said in October that an Ethereum futures-based ETF could launch sometime in the first half of 2022, noting that he believes one will launch before a spot bitcoin ETF.&nbsp;

Kelly Intelligence Plans Ethereum Futures ETF

Casey Wagner

<div id="highlights-block_617067515024e" class="highlights">
 <ul>
 <li>SPDR Gold Shares (ticker GLD), which many are comparing with BITO, hit $1 billion AUM in three days after its launch in 2004</li>
 <li>America’s first bitcoin futures-based ETF surpassed $1 billion in trade volume four hours into the session on Wednesday</li>
 </ul>
 
</div>



Four hours into the trading session on its second day listed, America’s first-ever bitcoin futures exchange-traded fund, the ProShares Bitcoin Strategy Fund (<a href="https://www.cnbc.com/quotes/BITO" target="_blank" rel="noreferrer noopener">BITO</a>), surpassed $1 billion in volume.&nbsp;



<blockquote class="wp-block-quote">“The ProShares Bitcoin Strategy ETF is now one of the most successful launches in ETF history. The initial demand for this ETF is off-the-charts and has exceeded even the most optimistic expectations,” said Nate Geraci, president of the ETF Store. “It’s clear investors and advisors were craving bitcoin price exposure in their traditional brokerage accounts and IRAs.”</blockquote>



If ProShares converts 43% of Wednesday’s volume into assets — it already converted 57% on Tuesday — it will be the first fund in history to reach $1 billion in assets under management in two days.



SPDR Gold Shares (ticker GLD), which many are comparing with BITO, hit $1 billion AUM in three days after its launch in 2004.&nbsp;



The fund’s demand has pushed the world’s largest digital currency to a <a href="https://cms.blockworks.co/etfs-fuel-bitcoin-rally-70k-on-the-horizon/" target="_blank" rel="noreferrer noopener">new all-time high</a> of more than $66,000 Wednesday.&nbsp;



“The futures on which the ETF is based started trading in 2017, and bitcoin ripped into that event. It topped out at $19,000 but wouldn’t see that level again for 3 years,” said Nicholas Colas, co-founder of DataTrek Research. “Yes, it is 3x that price now, but December 2017’s bitcoin buyers had to live through a lot of pain to see the promised land.”&nbsp;



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Early options activity for <a href="https://twitter.com/search?q=%24BITO&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BITO</a> show extreme bullishness, altho hardly a shocker. <a href="https://t.co/nXfWkResHF">https://t.co/nXfWkResHF</a>&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1450855340094992389?ref_src=twsrc%5Etfw">October 20, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Investors and analysts are awaiting filings from two other issues expected to launch their own futures-based funds in the coming days.&nbsp;



VanEck submitted its <a href="https://www.sec.gov/ix?doc=/Archives/edgar/data/0001137360/000113736021000916/ck0001137360-20201231.htm" target="_blank" rel="noreferrer noopener">post-effective amendment filing</a> Wednesday and hinted at a launch day of next week.&nbsp;



VanEck’s Bitcoin Strategy ETF will be available “as soon as practicable&#8221; after this coming Saturday, October 23, making Monday, October 25, a plausible date, according to the filing.



Valkyrie’s fund, which some analysts originally thought would launch alongside ProShare’s product, may list on the Nasdaq as early as Thursday. The issuer has <a href="https://www.sec.gov/edgar/browse/?CIK=1877493" target="_blank" rel="noreferrer noopener">not yet filed</a> its post-effective amendment.&nbsp;



BITO was trading <meta charset="utf-8">at $43.51, up 3.74%, at press time.&nbsp;