ProShares ETF adds Bitcoin short ETF to its Bitcoin products

What 

ProShares ETF, an exchange-traded fund (ETF) provider, has announced a product that will allow investors to short Bitcoin

Why 

The option to short the leading cryptocurrency gives investors the opportunity to bet against Bitcoin rallies and hedge against volatility 

What next 

The release of the ProShares Bitcoin Strategy ETF in 2021, a futures ETF, became the second-largest ETF release ever, trading over $1 billion in volume on its first day of trading. That release came on the heels of Bitcoin breaching all-time highs. ProShares seems to have timed the release of its short ETF to coincide with a decline in Bitcoin prices

The story 

The latest ProShares ETF, called BITI, comes amid increasing volatility in crypto markets and the greater economy. While betting against Bitcoin price gains may seem like a step backwards for cryptocurrency in the greater scheme of things, it’s not necessarily a zero-sum game. Professional investors often employ short and long options to protect investments against price volatility.

“As we know, Bitcoin can drop in value. BITI gives investors who believe the price of Bitcoin will drop an opportunity to potentially profit or hedge their cryptocurrency holdings,” says Michael Saphir, ProShares CEO. 

The fund does not invest directly in Bitcoin, but rather in underlying futures contracts. In this way, professional investors from traditional finance can gain access to these types of products without going against regulation. 

Shorting the price of any asset, let alone a volatile one like that of Bitcoin, is a complicated financial investment tool better left to professional investors. The ups and downs in the price mean that a short position, betting against a price rally, can land investors underwater if the price goes up when they bet it would go down. The recent price rally of Bitcoin from lows of $17,700 to highs of $21,000 in the space of three days is evidence of this. 

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