Pullbacks are inevitable after reaching highs, which makes for auspicious timing for the introduction of a bearish bitcoin futures ETF product by Direxion.
After reaching a high of over $66,000, bitcoin eventually came back down to earth, falling about 11% over the last five days. The price was boosted by the introduction of the first U.S. bitcoin futures ETF last week, which marked a big win for the digital currency after fighting an uphill battle with the Securities and Exchange Commission (SEC).
However, price consolidations are a healthy part of any market, and as such, pullbacks will eventually follow. The new bitcoin futures ETF paves the way for more cryptocurrency products taking the inverse side of the trade — something that Direxion Investments knows quite well with their suite of inverse ETFs.
Rather than taking on a separate bearish position in an asset, ETFs like those from Direxion can allow for shorting with ease. As such, traders can play both sides, going long with a bitcoin futures ETF when they err on the side of bullishness and using the shorting ETF when they feel bearish.
Floodgates Are Open
As mentioned, the bitcoin futures ETF was sure to open up the floodgates to new and innovative cryptocurrency products, particularly in the ETF space. It only makes sense for a volatile and relatively new asset class like bitcoin.
“Exchange-traded fund (ETF) issuer Direxion wants to short the price of a bitcoin futures contract,” a CoinDesk report said. “According to a filing with the U.S. Securities and Exchange Commission (SEC) on Tuesday, the Direxion Bitcoin Strategy Bear ETF will maintain short exposure to bitcoin futures contracts issued by the Chicago Mercantile Exchange. The product won’t directly invest in bitcoin.”
“The fund will generally maintain its short exposure to bitcoin futures during periods in which the value of bitcoin is flat or declining as well as during periods in which the value of bitcoin is rising,” the filing continued.
Despite the recent pullback, the leading cryptocurrency is still up close to 100% on the year. Looking at the YTD chart, however, it wasn’t a linear ride to the top, but those types of peaks and valleys make for an ETF product that bold traders could salivate over.
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