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Late last year, ProShares first introduced the ProShares Bitcoin ETF (BITO) to get bullish on bitcoin prices via futures. Now, the company will be adding more tactical exposure to the leading cryptocurrency with an inverse ETF.
Given the Securities and Exchange Commission allowing the listing of BITO, it should hopefully be a smooth path to the New York Stock Exchange for an inverse bitcoin ETF. It will certainly add to a trader’s arsenal, allowing them to play both sides of the volatility coin (literally) with bitcoin.
“ProShares nailed the SEC’s openness for a futures ETF and so there’s no reason to doubt them here, especially because BITO trading has been fine, it clearly works,” said Eric Balchunas, senior ETF analyst at BIoomberg. “This could mean the SEC is ready to take the next baby step.”
BITO played a large role in catapulting bitcoin to its November all-time high with it becoming the first U.S. ETF to focus on the leading cryptocurrency. While crypto purists may be skeptical about a futures ETF, it can work for investors looking for alternate exposure on a traditional market exchange.
As opposed to directly investing in the cryptocurrency itself, another way to get alternate exposure to bitcoin is to play its future price increases. As such, ETF investors may want to play on this bullish notion with Proshares’ BITO.
Similar ETF Product in Canada
Canadian ETF provider Horizon ETFs actually has an inverse bitcoin fund, BITI, that trades on the Toronto Stock Exchange. The fund is designed to provide daily investment results that track 100% the inverse (opposite) of the daily performance of an index that replicates the returns generated over time through long notional investments in bitcoin futures.
Per its product sheet, some of the key features of the ETF include:
- No margin: Investors do not need a margin account to use BITI to take an inverse position on bitcoin.
- Limited risk vs. shorting directly: As a result of daily rebalancing, the risk associated with holding BITI on any given day is limited to the current value of one’s capital invested in the ETF. By contrast, an investor directly shorting bitcoin takes on risk that exceeds 100% of the initial investment.
- Eligible for non-margin accounts: While an investor cannot directly hold bitcoin within a registered account, as an ETF, BITI can be held within an RRSP, RESP, and TFSA.
- ETF liquidity: BITI can be bought and sold on the Toronto Stock Exchange throughout the normal trading day by using a brokerage account.
- Utility as a hedge: BITI could also be used by investors with long positions in bitcoin to hedge out daily or short-term market risk on their holdings.
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