ETF Investors Are Betting On Historic Crypto Crash: Here's How

This year proved to be a tough year for cryptocurrency investors due to a variety of reasons such as inflation, liquidity crisis among crypto platforms, recession fears, and a lot more. The value of Bitcoin was trading at least 70% from its all-time-high recorded last November.

As reported earlier, ProShares announced the launch of the first U.S. short bitcoin-linked ETF called BITI.

Global Investment Strategist at ProShares, Simeon Hyman, said on Monday that the ETF is a partner to the long bitcoin strategy ETF, BITO. The strategist said that their aim was to be able to provide investors with a short exposure.

Providing an opportunity to probably profit from its decline, BITI conducts its operation inversely (-1x) to the S&P CME Bitcoin Futures Index. The ETF is connected to bitcoin futures contracts and rebalanced every day.

Hyman also shared that with the volatility of Bitcoin over the last several months, they have experienced several challenges in the spot market.

Further explaining, he said that this year the futures have matured, meaning that the roll costs that are the reason behind the concerns of the investors have shrunk, contrary to the spot market.

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Vice-chairman of VettaFi, Tom Lydon, in a show on Monday, said that the advisers seem to be interested in crypto ETFs since they can place them on the platforms that are in charge of their clients.

Due to its flexibility, Lydon believes there is an upside with BITI in part. There is no need for options, margins, or futures to account for investors; besides, margin levels also are not required to be maintained. In addition, investors shouldn’t have to be concerned about whether they will be losing more than their investments.

Lydon also says that since ETFs are available on their platforms, they have experienced a dramatic fall in ETFs value while more advisers are coming in.

0.95% is the fee for BITI. However, Hyman says that the ETF is a less costly option for exposure due to the restrictions and financing costs of shorting bitcoin.

Hyman says it was difficult to pull off, adding that the costs of borrowing are as high as close to 20% if someone chooses to go on margin in a brokerage account.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing