Short Bitcoin ETF Sees Slow Start in Market Despite Bearish Outlook for Bitcoin
The newly launched short bitcoin (BTC) exchange-traded fund (ETF) from ProShares with the ticker BITI saw a slow start in the market on its first day of trading, before interest picked up noticeably on the second day.
The ETF, which launched on Tuesday this week on the NYSE Arca exchange, on its first trading day on Tuesday saw a trading volume of 183,284 shares, worth approximately USD 7m. However, the volume picked up significantly on day two of trading, when 870,000 shares changed hands for a value of about USD 35m, per ProShares data.
The sharp uptick in trading volume for the short ETF on Wednesday came as BTC fell in price from close to USD 21,000 to just over the key USD 20,000 mark.
The USD 7m trading volume for BITI on its first day makes up only a tiny fraction of the USD 1bn in volume that was seen on the first day of trading for BITO, the first regular bitcoin futures-backed ETF to launch in the US.
ProShares short bitcoin ETF first two days of trading (30 min chart):
Unlike a regular bitcoin ETF, ProShares’ new short bitcoin ETF lets investors make money as bitcoin falls in price. It thus offers a relatively straightforward alternative for traders who are bearish on the coin and want to bet on price drops.
Other alternatives for getting the same exposure include taking short positions in bitcoin futures or using margin accounts to go short in the bitcoin spot market.
Commenting on Twitter on the launch day, James Seyffart, an ETF analyst at Bloomberg Intelligence, said that BITI had gotten off to “a pretty slow start based on its volume,” with only USD 1m traded after 1 hour on its first day.
The comment from Seyffart was picked up by Bloomberg’s senior ETF analyst Eric Balchunas, who added that the volume represents “less than 1%” of the volume BITO had at the same time of its first day of trading.
“Not surprising, given the exotic form of exposure and the recent dud spot bitcoin launches in Australia,” Balchunas wrote, while referring to the Cosmos Asset Management Bitcoin ETF (CBTC) traded on Australia’s Cboe exchange.
Responding to the tweet, other Twitter users appeared to agree that the slow start for BITI was not surprising.
“It's hard to short something that has already dropped 70% and is arguably near a bottom. That would be a fool’s errand,” one user wrote, while another pointed out how the launch of BITO marked “the top” for bitcoin, and “BITI the bottom.”
And while the volume was underwhelming relative to that of other bitcoin ETF launches, ProShares CEO Michael L. Sapir seemed to remain optimistic about the new product.
“The reception that BITI is getting in the market affirms investor demand for a convenient and cost-effective ETF to potentially profit or hedge their cryptocurrency holdings when bitcoin drops in value,” Sapir was quoted as saying in the announcement.
At 14:05 UTC, BTC trades at USD 20,459 and is down 1% in a day and 9% in a week. The price is down 30% in a month and 37% in a year.
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