ProShares Files An application With the U.S. for Short Bitcoin ETF Betting Against Bitcoin

07. Apr 2022 Posted by Akolkar B on News

On Wednesday, April 6, financial service provider ProShares filed a new application dubbed ProShares Short Bitcoin Strategy exchange-traded fund (ETF) to bet against the price of the world’s largest cryptocurrency Bitcoin.

As per the filing with the U.S. Securities and Exchange Commission (SEC), the short Bitcoin ETF by ProShares will track the inverse performance of an index of Bitcoin futures. Last October 2021, ProShares launched its Bitcoin Strategy ETF which became one of the most popular ETFs on debut.

If approved, this will be the first U.S. ETF to bet against the performance of Bitcoin futures. But ProShares is not the first to apply for such an ETF product. Previously, its rival company Direction had filed for shorting Bitcoin futures. However, it had to pull the application at the request of the SEC.

But Eric Balchunas, the senior ETF analyst at Bloomberg Intelligence says that the SEC shall be more comfortable with the possibility of an inverse Bitcoin futures ETF this time. The analyst noted: “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. This could mean the SEC is ready to take the next baby step.”

Apart from this, companies have been finding it very difficult to bring spot Bitcoin ETFs into the market. World’s largest digital assets manager Grayscale has filed to turn its Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin ETF.

While the SEC has been comfortable with approving a Bitcoin futures ETF, it has been quite hesitant about approving the spot product. In one his recent tweets, Grayscale CEO Michael Sonnenshein wrote: “If the SEC is comfortable with a Bitcoin futures ETF, they must also be comfortable with a spot Bitcoin ETF. And they can no longer justifiably cite the ‘40 Act as being the differentiating factor”.

Besides, the Grayscale CEO also said that they have kept the option open of pursuing a legal action against the SEC.

After last few weeks of strong performance, Bitcoin (BTC) has once again come under pressure and corrected more than 10% in the last two days. As of press time, Bitcoin is currently trading at $43,814.

The recent comes as investors are willing to move to the risk-averse asset as the Federal Reserve prepares for one of the biggest rate hikes ahead.