Key Points
- ProShares has launched Ultra Bitcoin ETF (BITU) and ProShares UltraShort Bitcoin ETF (SBIT) to curb Bitcoin’s volatility.
- These ETFs aim to provide amplified returns on spot Bitcoin, rather than the futures market.
ProShares introduced its Ultra Bitcoin ETF (BITU) and ProShares UltraShort Bitcoin ETF (SBIT) on Tuesday, April 2.
BITU tracks twice the daily performance of Bitcoin via the Bloomberg Bitcoin Index, while SBIT tracks its exact inverse.
Bitcoin ETFs Attracting Investments
The successful launch of twelve Bitcoin ETFs has seen net inflows of $12 billion and nearly $60 billion in total assets.
These ProShares ETFs differ by focusing on spot Bitcoin returns, not the futures market.
Michael O’Riordan, founding partner of Blackwater, an ETF consulting firm, commented on the development, stating that it shows how ETF managers can leverage positive sentiment.
ProShares CEO, Michael Sapir, stated that the leveraged BITU fund gives investors the opportunity to pursue amplified Bitcoin returns or target exposure with less capital risk.
Conversely, the UltraShort fund, SBIT, allows investors to aim for profits when Bitcoin’s price falls or to hedge their Bitcoin exposure.
Addressing Bitcoin’s Price Volatility
The volatility of Bitcoin‘s price is increasing the demand for investment tools offering leveraged and short exposure to the cryptocurrency.
Over the last week, Bitcoin’s price has seen significant swings, dropping over 10% from its all-time high of $74,458.
Despite a 10% decline since its mid-March peak, Bitcoin’s value has increased by 54% since the start of the year.
The approval of spot Bitcoin ETFs by regulators has led to a wave of new products in the market, giving investors more ways to allocate capital to BTC.
These offerings highlight the growing desire among investors to gain exposure to the crypto market.
According to Matt Maley, chief market strategist at Miller Tabak + Co, the introduction of leveraged ETFs was expected, but they may present both opportunities and risks for investors.
“On the negative side, it will likely lead to an increase in speculation in an already volatile asset class. However, they will also help investors hedge their positions. So, that could offset some of that speculation. Overall, it should continue to draw more investors into this asset class”, he commented.
