ETF Investors Are Betting On Crypto’s Historic Crash: Here’s How

This year turned out to be a tough year for crypto investors due to a variety of reasons such as inflation, liquidity crisis among crypto platforms, recession fears and much more. The value of Bitcoin was trading down at least 70% from its all-time high recorded last November.

As previously reported, ProShares announced the launch of the first US short bitcoin-linked ETF called BITI.

ProShares global investment strategist Simeon Hyman said on Monday that the ETF is a partner of the long bitcoin ETF strategy, BITO. The strategist said his goal was to be able to provide investors with short exposure.

Providing an opportunity to likely profit from its decline, BITI trades inversely (-1x) to the S&P CME Bitcoin Futures Index. The ETF is connected to bitcoin futures contracts and rebalances every day.

Hyman also shared that with the volatility of Bitcoin in recent months, they have experienced various challenges in the spot market.

Explaining further, he said that this year futures have matured, meaning that the roll costs that are the reason behind investors’ concerns have come down, contrary to the spot market.

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VettaFi Vice President Tom Lydon, on a show on Monday, said advisors seem to be interested in crypto ETFs as they can place them on platforms that are run by their clients.

Due to its flexibility, Lydon believes that BITI has an advantage in part. There is no need for options, margins or futures to account for investors; furthermore, there is no need to maintain margin levels either. Also, investors should not worry that they will lose more than their investments.

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Lydon also says that since ETFs are available on their platforms, they have seen a dramatic drop in ETF value as more advisers come on board.

0.95% is the BITI rate. However, Hyman says that the ETF is a less expensive option for exposure due to the restrictions and financial costs of shorting bitcoin.

Hyman says that was difficult to pull off, adding that borrowing costs are as high as close to 20% if someone chooses to take margin on a brokerage account.

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