Direxion, an exchange-traded fund provider, has filed for a product to allow speculators buy contracts that shorten the Bitcoin price.
The Direxion Bitcoin Strategy Bear Exchange Tradeable Fund was unveiled by the company in a filing to the U.S Securities and Exchange Commission (Oct. 26). It will not invest in Bitcoin directly, as it will instead hold managed short exposure positions contracts issued by Chicago Mercantile Exchange.
Direxion stated the fund could invest in BTC futures and money market funds as well as short-term debt instruments. The firm warned that the product’s value could drop to zero.
“The Fund’s value could drop significantly without warning and even to zero. It is possible to lose all of your investment.
Eric Balchunas, a Bloomberg senior ETF analyst, described it as an inverse Bitcoin ETF. Eric Balchunas, senior ETF analyst at Bloomberg, stated that there is already a ‘-1x BTC Futures ETF’ in Canada, called BITI. He added, “while it’s gotten quite wrecked it WORKS (as Bitcoin tends sells off quickly).
Direxion has filed for an INVERSE BTCIN ETF. This ETF will be short front-month bitcoin futures. It is basically the $XIV equivalent to $BITO. This filing comes just hours after the first levered Bitcoin ETF was filed. pic.twitter.com/bN2m7pIZw5
— Eric Balchunas (@EricBalchunas) October 26, 2021
Direxion filed for a Bitcoin ETF originally in 2018, but it was put in the same queue as all the other applications that were delayed by the SEC.
Bloomberg reported that Valkyrie applied for a leveraged BTC futures ETF on Oct 26. This will provide 1.25x exposure. It will trade under the ticker “BTFX” and can hold options, futures, swaps and options.
VandelayBTC, a user who was not impressed by the low leverage available, used the Zoolander meme to make shade.
1.25x What is this? What is leverage for ants?
— Vandelay BTCTC Industries (@VandelayBTC) October 26, 2021
Related:Bitcoin futures ETF at risk of exceeding contract limits
Nate Geraci, President of ETF Store, commented on the innovative futures products currently being offered. He said that there would be more filings like ETH futures than a spot product will ever receive approval.
CME Bitcoin futures have been approved by the SEC from a regulatory standpoint. These leveraged and inverse products can exist in other blessed markets. There is no reason why they should not exist here.
Bitcoin prices fell 3.6% in the last 24 hours, trading at $60,787 as of the writing.