ProShares launches ETF to capitalize on bitcoin price decline

The giant ProShares is today launching an ETF, a listed financial product, which will make it possible to bet on the decline of bitcoin.

In October, ProShares had been one of the first big names in traditional finance to offer ETFs (exchange traded funds) in the United States replicating the price of bitcoin. This was in a period when bitcoin was doing best, reaching up to 69,000 dollars in November Except that since then, the cryptocurrency has lost 70% of its value, a signal that has not gone unnoticed by ProShares.

One of the main providers of ETFs, which manages $50 billion in assets, announced on Monday that it would launch a short ETF on the Toronto Stock Exchange this afternoon: the Proshares Short Bitcoin Strategy ETF. Wire code: BITI (BITI). It will provide “a convenient way for investors to potentially profit from a decline in bitcoin’s price or hedge their cryptocurrency exposure with the convenience of an ETF.”

An ETF, also called a tracker, is an index fund that generally replicates an equity index (such as the CAC 40) or a sector index (for example the listed banking sector). But an ETF can also replicate the price of other assets (such as gold or bitcoin here) and in reverse (when the price of the asset falls, the price of the ETF rises, and vice versa). It is a financial product accessible via a securities account for example.

“As recent times have shown, the value of bitcoin can fall,” said ProShares boss Michael L. Sapir. “BITI offers investors who believe the price of bitcoin will fall an opportunity to make a potential profit or hedge their cryptocurrency holdings. BITI allows investors to conveniently gain short exposure to bitcoin by purchasing an ETF in an account traditional brokerage.”

Is this a good or a bad thing, will it further increase the pressure on the crypto queen? Not so sure. Already short ETFs exist on a multitude of more traditional market assets. It is not just vile speculation, it is neither more nor less than a financial hedging product to protect against the decline of the asset in question and protect possible hard positions.

And then for some time now, the main question has been the liquidity of the crypto market. And there, as we know, we come up against technical obstacles because it is the blockchain that opposes monetary creation. There, with this kind of product, which constitutes a new bridge between cryptos and traditional finance, we make a kind of bridge which allows one way or another to increase liquidity and flows.

It is ultimately a good thing which could on the contrary allow bitcoin to improve its exposure to investors, perhaps a little reluctant to take hard positions on the crypto. In any case, we can talk about dream timing to launch such a product.

Antoine Larigaudrie edited by PA

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