2024.04.03 05:52
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Specializing in Bitcoin volatility! Bitcoin leveraged and short ETFs are here

After the Bitcoin spot ETF, the enhanced version has also arrived

The bull market in crypto assets driven by the launch of Bitcoin spot ETF is still not over, and Wall Street has introduced leveraged and short ETF products, reigniting market enthusiasm.

This Tuesday, well-known financial product issuer ProShares launched the Ultra Bitcoin ETF (BITU) and ProShares UltraShort Bitcoin ETF (SBIT). The former aims to track the 2x daily performance of the Bloomberg Bitcoin Index, while the latter tracks the index's decline. The annual fee for both ETFs is 0.95%.

ProShares CEO Michael Sapir stated that the BITU leveraged fund allows investors "the opportunity to pursue amplified Bitcoin returns or target exposure levels with less risk capital." On the other hand, the SBIT fund "allows investors to profit from a decline in Bitcoin prices or hedge their Bitcoin positions."

Since the green light from regulators in the first quarter of this year, nearly ten ETFs directly investing in Bitcoin spot have emerged, attracting $12 billion in inflows with total assets under management close to $60 billion. ProShares' new ETF products can be seen as enhanced versions of Bitcoin spot ETFs, offering amplified returns around Bitcoin spot.

The significant inflow of funds into the ETF space highlights investors' enthusiasm for Bitcoin spot ETFs and the increasing popularity of ETFs as frictionless trading tools. More related products are on the way, such as the newly transformed HashDex Bitcoin ETF (DEFI) and the pending approval Grayscale Bitcoin Mini Trust Fund.

Michael O'Riordan, founding partner of ETF consulting firm Blackwater, told the media:

This shows how ETF managers opportunistically try to maximize positive sentiment.

With the approval of Bitcoin spot ETFs by regulatory agencies, new products are emerging rapidly, providing investors with channels to allocate to crypto assets. Whether bullish or bearish on Bitcoin, these products can meet various investors' needs for crypto asset allocation.

Matt Maley, Chief Market Strategist at Miller Tabak, believes that the launch of leveraged ETFs is only a matter of time, but they could be a double-edged sword:

Negatively, these ETFs may increase speculative trading in this already highly volatile asset class. But they can also help investors hedge positions, so they may offset some speculative activity. Overall, they should continue to attract more investors into this asset class.

The market's enthusiasm for leveraged and short Bitcoin investment tools explains the sharp fluctuations in Bitcoin prices. Despite a 10% drop since hitting a high point in mid-March, Bitcoin has still risen by nearly 50% year-to-date. This marks Bitcoin's recovery from the dark period of 2022, when the crypto market crash led to a 64% decline in Bitcoin for the year, its second-worst annual performance in history