World’s first short Bitcoin ETF sees exposure explode 300% in days

July 6, 2022 Coin Telegraph

Bitcoin

Since launching last month, the ProShares Short Bitcoin Strategy ETF (BITI) has eclipsed others in inflows.

Bitcoin (BTC) remains a popular institutional investment target in July, but the money is not betting on a bright future.

According to data from research firm Arcane Research published July 6, institutional flows focused on products offering exposure to shorting BTC in the first week of the month.

Shorting Bitcoin is the name of the game

Since launching in the United States in late June, the ProShares Short Bitcoin Strategy ETF (BITI), the first exchange-traded fund (ETF) to be "short" BTC, has proved a hit.

That trend has only accelerated in July, with short exposure jumping over 300% in days, data confirms.

"BITI, the first inverse BTC ETF, grew further last week," Arcane summarized in Twitter comments.

"After becoming the second-largest bitcoin-related BTC ETF in the U.S. after only four days of trading, the net short exposure has grown further and increased by more than 300% last week."

*ProShares Short Bitcoin Strategy ETF (BITI) exposure chart. Source: Arcane Research/ Twitter*

The timing for BITI in the U.S. is conspicuous in itself, coming as BTC/USD plumbed multi-year lows of $17,600.

As Cointelegraph reported, expectations among analysts remain skewed to the downside, and the BITI inflows appear to confirm that institutional sentiment is likewise.

Separate data published by digital asset investment firm CoinShares on July 4, meanwhile, put weekly inflows into Short BTC products at $51 million — easily the majority of the week's total of $64 million.

While long BTC investments were just $20 million, CoinShares nonetheless highlighted persisting demand for such products despite shorts stealing the limelight.

"This highlights investors are adding to long positions at current prices, with the inflows into short-Bitcoin possibly due to first-time accessibility in the US rather than renewed negative sentiment," it wrote.

Business (or lack of) as usual for GBTC

Testing times, meanwhile, remain for the stalwart institutional Bitcoin investment vehicle, the Grayscale Bitcoin Trust (GBTC).

After U.S. regulators rejected Grayscale's application to convert the Trust to a Bitcoin spot ETF, the firm began legal action, a sign of the frustration facing an industry dealing with both regulatory scrutiny and declining asset prices.

The so-called GBTC premium, the difference between Bitcoin spot price and shares of GBTC, has been negative for over a year, at several points becoming a more than 30% discount.

*GBTC premium vs. asset holdings vs. BTC/USD chart. Source: Coinglass*

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Institutional investors shorting Bitcoin made up 80% of weekly inflows

July 5, 2022 Coin Telegraph

BITI

Digital asset product inflows were dominated by the $51.4 million posted by short BTC funds last week, with ETH products generating the next highest figure at just $4.9 million.

Institutional investors loaded up on a record $51.4 million worth of investment products offering exposure to shorting the price of Bitcoin (BTC) last week.

According to data from the latest edition of CoinShares’ weekly “Digital Asset Fund Flows” report, there was $64 million worth of inflows for digital asset products between June 27 and July 1, with short BTC funds representing 80% of that figure.

U.S.-based investors accounted for the lion's share of inflows at $46.2 million, with short-BTC investment products in solid demand after ProShares launched the first-ever U.S.-based short Bitcoin exchange-traded fund (ETF) on June 22. The ETF trades under the ticker BITI and offers shorting exposure via futures contracts.

“This highlights investors are adding to long positions at current prices, with the inflows into short-Bitcoin possibly due to first-time accessibility in the US rather than renewed negative sentiment.”

CoinShares also noted that institutional investors from Brazil, Canada, Germany, and Switzerland snapped up a combined $20 million worth of crypto investment products. Sweden partially offset that figure with $1.8 million worth of outflows.

Short BTC products have now seen year-to-date inflows totaling $77.2 million, with that figure placing it behind only multi-asset products and Solana (SOL) products, which have posted $213.5 million and $110.3 worth of inflows so far in 2022.

Looking at the inflows for other digital asset products, those offering exposure to Ether (ETH) generated $4.9 million, marking the second consecutive week of inflows after a lengthy 11-week trend of shedding. However, year-to-date ETH funds are still down with $450.9 million worth of outflows.

The remainder of the inflows was spread across multi-asset funds at $4.4 million, while SOL, Polkadot (DOT), Cardano (ADA), and BTC products also posted minor inflows of $1 million, $700,000, $600,000, and $600,000 respectively.

The surge in short BTC fund inflows last week also follows from the prior week when there was $423 million worth of outflows for digital asset products, the highest amount ever on CoinShares’ records. Notably, short BTC funds escaped the carnage that week, posting $15.3 million worth of inflows, while BTC products saw significant outflows of $453 million.

Crickets on day 1… but Proshares short Bitcoin ETF volume up 380% on day 2

June 23, 2022 Coin Telegraph

BITI

A slow first day of trading on the short Bitcoin ETF may have been nothing but a slight hiccup in ProShares’ newest product as volumes grew on the second day.

The first short Bitcoin ETF from ProShares got off to a very slow start on its June 21 launch but gathered pace by increasing trading volume 380% on day two.

On launch day June 21, the ProShares Bitcoin Short Strategy Exchange-Traded Fund (BITI) traded a lackluster 183,300 shares which ETF analyst at Bloomberg Eric Balchunas noted in a tweet was “less than 1% of the volume $BITO had at this time on Day One.”

However the next day’s trading volume jumped nearly four times to 886,200 shares worth about $36.2 million according to Yahoo Finance.

ProShares #Bitcoin short strategy ETF (BITI) trades over 870k shares, 35 million value, on second trading dayhttps://t.co/gyfMcm4UOz
— unfolded. (@cryptounfolded) June 22, 2022

The BITI exchange traded fund (ETF) allows investors to take short positions on the Bitcoin market without holding BTC themselves. Shorting means speculating that the value of a market or asset will fall.

ProShares CEO Michael L. Sapir talked up the volume on day two as indicative of demand and the low fee structure of BITI.

“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.”

ProShares also provides the Bitcoin Strategy ETF (BITO), which launched on October 18. BITO saw about $1 billion in volume on its first day of trading.

By November, BITO’s volume was among the top 2% of all ETFs, but has now lost 50.93% of its value since inception

Of course $36M pales in comparison to the $1B long positions on day one. This may mean most investors are uncertain if there is further downside from here. Over the past 30 days, the largest crypto by market cap has lost over 30% of its value.

BITI’s relatively poor performance on launch day drew jeers from CFA at Bloomberg Intelligence James Seyffart. On June 21, Seyffart tweeted that within the first hour of trading, BITI had only done about $1 million in volume.

Seyffart said that he expected opening volume to be low, but “Yea def not saying it’s a surprise. Though I must admit I’m a tad surprised it’s THIS low.”

So.. $BITI, the Proshares inverse #Bitcoin futures ETF that launched today is off to a pretty slow start based on its volume. Granted it didn't start trading till about 9:57 AM. Sooo we have an hour of trading and only $1 million in total trading volume... https://t.co/Hf0XFeGmsX
— James Seyffart (@JSeyff) June 21, 2022

By close, BITI had done about $7.1 million in volume at a daily average price of $39.06 per share.

Australia’s new Bitcoin ETFs have also struggled to attract interest. In April, the Cosmos Purpose Bitcoin Access ETF (CBTC) was expected to attract $1 billion in inflows. However, it and the ETFS 21Shares Bitcoin ETF (EBTC) launch days were delayed until May 12. To date CBTC only has $810,000 assets under management while EBTC has $2.8 million.

American traders still yearn for a spot Bitcoin ETF which the Securities and Exchange Commission have denied for years. Commissioner Hester Pierce believes a Bitcoin spot ETF can be launched in the US when industry insiders and regulators cooperate closer to ensure that both are on the same page.

BITI