ProShares unveils first tactical spot bitcoin ETFs

Apr 8th, 2024 | By | Category: Alternatives / Multi-Asset

ProShares has introduced two new crypto-related ETFs in the US providing leveraged and inverse leveraged exposure to changes in the spot price of bitcoin.

ProShares unveils first tactical spot bitcoin ETFs

The ETFs enable sophisticated investors to pursue amplified returns from movements in the price of bitcoin.

The ProShares Ultra Bitcoin ETF (BITU US) and ProShares UltraShort Bitcoin ETF (SBIT US) have been listed on NYSE, each with an expense ratio of 0.95%.

BITU and SBIT utilize swap contracts to provide twice the daily return (+200%) and twice the inverse daily return (-200%), respectively, of the Bloomberg Bitcoin Index.

The index, which measures the performance of a single bitcoin traded in US dollars, is determined through a composite of US dollar-denominated bitcoin trading activity across multiple digital asset platforms that satisfy governance, liquidity, and data integrity criteria.

The new ETFs are the first in the US to provide tactical exposure to bitcoin’s spot price with the existing line-up of leveraged bitcoin funds being based on changes in the price of bitcoin futures. SBIT, meanwhile, is the first US-listed ETF to offer inverse leveraged exposure to bitcoin, whether through spot or futures prices, highlighting further progress in the crypto industry’s ongoing integration into the mainstream financial landscape.

The price of bitcoin has soared by approximately 330% since the beginning of 2023, reaching recent-all-time highs of around $72,000. This momentum has stalled recently, however, with the world’s largest cryptocurrency trading sideways over the past month, albeit with significant volatility.

ProShares’ latest offering enables sophisticated investors to pursue amplified returns from movements in the price of bitcoin. Similar to all leveraged ETFs, however, these funds do come with significant risks which is why they are generally not suitable for a retail audience. Specifically, they are not appropriate as buy-and-hold investments as they tend to decay in value if held for an extended period, potentially leading to large losses, especially in volatile but range-bound markets.

Tags: , , , , , , ,

Leave a Comment