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Profiting from the Bitcoin crash? ProShares ETF makes it possible

Profiting from the Bitcoin crash? ProShares ETF makes it possible

According to a press release, investment giant ProShares will launch a new Bitcoin-linked exchange-traded fund (ETF) in the United States. The company behind the first BTC ETF in this country, under the ticker BITO, will launch the Short Bitcoin strategy under the ticker BITI.

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This investment vehicle will be available tomorrow June 21 on the New York Stock Exchange (NYSE) and will track the BTC price inversely on the S&P Chicago Mercantile Exchange (CME) BTC futures index. In other words, investors will benefit if BTC prices go down.

As the number one cryptocurrency recently traded below its 2017 all-time high of $20,000 and given the current macro environment, market participants are expecting more losses. The new ProShares ETF will offer these investors the opportunity to take advantage of the downtrend.

In this regard, according to the press release, BITI aims to meet the “challenge of gaining short exposure to Bitcoin”. The investment firm says this process can be “burdensome and costly for many investors” in the United States.

Investors in this country in particular may face obstacles when attempting to short-sell Bitcoin Futures-related products. The US regulatory environment makes it more difficult than the rest of the world, but ProShares tries to provide a solution.

Long-term holders of certain assets often use a short position to hedge their long positions against future drawdowns. Therefore, this new investment vehicle could provide investors with a solution to protect their assets. The company’s CEO, Michael Sapir, said:

BITI offers investors who believe that the price of bitcoin will fall the opportunity to make potential profits or hedge their cryptocurrency holdings. BITI makes it easy for investors to gain short-term exposure to bitcoin by purchasing an ETF in a traditional brokerage account.

BTC is trending down but is seeing some recovery on the 4hr chart. Source: BTCUSD Tradingview

The dangers of shorting Bitcoin with ProShares

The new short BTC ETF will not be physically settled and will not be diversified. Investors will only be exposed to the price of BTC in the futures market. As the company clarified, there could be times when the spot price of BTC and its future price are different.

This could create barriers for investors. Similarly, the ETF will attempt to hit a 1X daily target for its BTC-based strategy. This could create compounding gains for investors, but could also cause them significant losses, ProShares warned.

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The investment firm will also launch a short BTC mutual fund. Called Short Bitcoin Strategy ProFund, this investment vehicle will launch tomorrow under the symbol BITIX. Sapir concludes:

With the addition of BITI and BITIX, ProShares and ProFunds will be the only fund families in the United States to offer funds for investors to express their views on the direction of bitcoin, whether they think the price is going to go up or down. go down.

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