Diving Into The Short Bitcoin ETF

While the sell-off in cryptocurrency continues, one exchange-traded fund issuer has launched a way to short bitcoin. 

Eight months after establishing the first U.S. bitcoin futures ETF, ProShares has introduced the first short-bitcoin ETF. The ProShares Short Bitcoin Strategy ETF (BITI) was developed to give investors a way to profit from declines in the price of the digital asset. The ETF is the first U.S. fund of its kind.  

The challenge with a short ETF, of course, is timing the market. If an investor believes the bottom is now and not in the future, there are a variety of available long-crypto ETFs. 

ProShares Short Bitcoin Strategy ETF (BITI) 

According to ProShares, BITI is designed to deliver the opposite of the performance of the S&P CME Bitcoin Futures Index through bitcoin futures contracts. Investors can also use BITI to hedge bitcoin and cryptocurrency exposure. 

ProShares Bitcoin Strategy ETF (BITO) 

The ProShares Bitcoin Strategy ETF was the first cryptocurrency ETF that was allowed to trade on a major U.S. exchange. BITO holds bitcoin futures contracts.  

Valkyrie Bitcoin Strategy ETF (BTF) 

BTF also does not invest in bitcoin directly but holds front-month Chicago Mercantile Exchange bitcoin futures. BTF is much smaller and less liquid than BITO.  

Grayscale Bitcoin Trust (GBTC) 

Before we had BITO, the Grayscale Bitcoin Trust was the best bitcoin fund choice for most investors. But GBTC is a trust, not an ETF. Grayscale is trying to convert it to an ETF, which makes sense so it can transition from over-the-counter to being listed on a major U.S. exchange. Unlike many other bitcoin ETFs, GBTC holds real cryptocurrency with each share currently representing 0.0009235 bitcoin. 

VanEck Bitcoin Strategy ETF (XBTF) 

The VanEck Bitcoin Strategy ETF is VanEck's bitcoin futures fund. Launched in November 2021, following the debuts of BTF and BITO, XBTF is different than the other two funds in that it has a significantly lower expense ratio and is structured as a C-corp rather than a registered investment corporation. That gives it some tax advantages. C-corps are not required to distribute long-term capital gains. 

So, investors have cryptocurrency ETF choices. With the launch of BITI, they can now finally be assured there are tools to go both long and short bitcoin. Although BITI might be a little lonely right now, it is unlikely to remain alone for long. Currently it is a way to gain short-side exposure to bitcoin and should garner plenty of attention.