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If the US SEC passes an approval, this would be the first US ETF that would allow betting against the performance of Bitcoin futures.
Financial market players continue to bring Bitcoin derivative products to the market. On Wednesday, April 6, ProShares filed for a Short Bitcoin Strategy exchange-traded fund (ETF) that would track an inverse performance of the index for Bitcoin futures.
This would be a one-of-its-kind product that would allow betting against the world’s largest crypto Bitcoin (BTC). Last October 2021, ProShares launched the Bitcoin Strategy ETF with the ticker BITO. It also turned out to be one of the most popular ETF debuts on record.
If ProShares manages to get a go-ahead from the US SEC, it also would be the first US ETF betting against the performance of Bitcoin futures. However, ProShares’ rival Direxion filed for a similar request last year by the SEC pulled down the request.
But Bloomberg Intelligence’s senior ETF strategist Eric Balchunas believes that this time, the SEC is more comfortable with the possibility of having an inverse futures ETF. Balchunas said:
“ProShares nailed the SEC’s openness for a futures ETF and so there’s no reason to doubt them here, especially because BITO trading has been fine, it clearly works. This could mean the SEC is ready to take the next baby step.”
Is the Spot Bitcoin ETF Coming in 2022?
For a very long time, the US SEC has been delaying the approval of spot Bitcoin ETF citing investor concerns. However, Grayscale CEO Michael Sonneshein notes that the SEC’s case against a spot Bitcoin ETF is weakening.
In a series of tweets, Sonnenshein shares why the SEC’s citation of a 1940 Act holds less importance. “As of today, those arguments have been significantly weakened as the SEC approved the Teucrium #Bitcoin Futures ETF, which is registered under the ’33 Act, and not the ‘40 Act,” he says. Sonnenshein further notes:
“If the SEC is comfortable with a Bitcoin futures ETF, they must also be comfortable with a spot Bitcoin ETF. And they can no longer justifiably cite the ‘40 Act as being the differentiating factor”.
Grayscale is willing to convert its institutional product Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin ETF. During an interview with Bloomberg earlier this week, Sonnenshein was asked whether his firm would consider the effectiveness of an Administrative Procedure Act Lawsuit. Replying to this the Grayscale CEO said all options are on the table.
After a strong performance for the last few weeks, Bitcoin (BTC) has once again entered a correction. The world’s largest crypto has corrected 10% in the last two days.