ProShares Debuts ETF That Bets Against Surging Ether

ProShares, which operates the largest bitcoin ETF, rolled out the first exchange-traded fund that will bet on falling prices in ether futures at a time when crypto prices are rising and the first ether futures funds draw little investor attention.  

The ProShares Short Ether Strategy ETF (SETH) began trading Nov. 2 at $40.40 a share and had risen to $40.83 in afternoon trading on Friday, Nov. 3.  

The fund’s bet on falling ether prices runs contrary to the 51% gain in the second-largest cryptocurrency this year. Bets against crypto this year haven’t necessarily been profitable: ProShares’ short bitcoin ETF, the ProShares Short Bitcoin Strategy (BITI) had dropped 53% through the end of last month, the second-worst performance among all ETFs not including those using leverage. 

Still, ProShares says it’s seeking to fill a gap with respect to availability of options for crypto investing. 

“SETH is designed to address the challenge of acquiring short exposure to ether, which can be onerous and expensive,” ProShares CEO Michael L. Sapir said in a company statement. “ProShares now offers investors opportunities to profit both on days when ether increases and when it drops.”  

The fund tracks the inverse of the S&P CME Ether Futures Index, according to the company’s statement. The fund has an expense ratio of 0.95%. The average expense ratio of cryptocurrency ETFs currently on the market is 1.03%.  

Investors have largely ignored the initial batch of ether futures ETFs, which the SEC greenlit last month. The ProShares Ether Strategy ETF (EETH), currently has pulled in $7.72 million, according to etf.com data. The combined six ETFs that started trading on Oct. 2 garnered only $1.92 million on their first day of trading.  

By comparison, when the ProShares Bitcoin Strategy ETF (BITO), the first bitcoin futures fund, hit the market in 2021, the investment vehicle brough in about $1 billion in its first days of trading.  

Ether Funds Gain Few Inflows as Spot Bitcoin Race Heats Up

Ether futures funds have not captured the attention, and wallets, of investors partially because bullish digital asset proponents are largely waiting on a spot bitcoin and spot ether ETF, which the SEC has thus far neglected to approve.  

A slew of firms are currently working with the SEC in a final push to get their spot bitcoin applications over the edge of agency approval. Some analysts questioned whether it makes sense to roll out an inverse ether ETF, while the regulatory body is still preventing investors from having access to a spot digital currency fund.  

“Try to wrap your mind around the fact that investors have access to this before a spot bitcoin ETF,” ETF Store President Nate Geraci wrote in a post on X.