Summary: The ProShares Short Bitcoin Strategy ETF (NYSEARCA: BITI) is the best and most liquid instrument to short BTC in traditional markets. Investors looking to short BTC should consider the BITI ETF as their primary instrument.
What is ProShares Short BTC ETF?
ProShares Short BTC ETF is an exchange-traded fund seeking daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of bitcoin. ProShares Short BTC ETF provides investors with a simple and effective way to bet against bitcoin.
The fund invests in swaps, futures contracts and other derivatives that provide inverse or short exposure to the performance of bitcoin. This means that when bitcoin prices go down, the value of the fund goes up, and vice versa. The ProShares Short BTC ETF is one of the first bitcoin-related investments to be listed on a major U.S. exchange.
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ProShares Short BTC ETF vs. Other Short BTC Funds
The table below compares the ProShares Short Bitcoin Strategy ETF (NYSEARCA: BITI) to other short BTC funds.
How to buy ProShares Short BTC ETF
The ProShares Short BTC ETF can be bought and sold like any other stock on a major U.S. exchange. The shares are traded in real-time, so investors can buy or sell at the current market price.
You can get started in 4 simple steps:
- Find a participating broker that has the BITI ProShares ETF listed on their platform. These include major platforms like TD Ameritrade, Charles Schwab, Vanguard, Robinhood and Fidelity.
- Open an account with the broker and fund it with cash or securities.
- Place an order to buy BITI shares. Be sure to select the correct ticker symbol (BITI) and a number of shares you want to purchase.
- The shares will be settled in 1-2 days and you will start to see BITI show up in your account.
ProShares Short Bitcoin Strategy ETF Performance
The chart below is the performance of ProShares Short Bitcoin Strategy ETF (NYSEARCA: BITI) since its inception.
What are the Risks of buying a Short BTC ETF?
Investing in any ETF comes with risks. Some of the specific risks associated with BITI include:
- Tracking Risk: The value of BITI may not exactly track the inverse (-1x) performance of bitcoin due to fees and expenses incurred by the fund, as well as tracking errors.
- Derivatives Risk: Derivatives are complex financial instruments that can be risky and volatile. The value of BITI may be more volatile than the underlying asset it is tracking due to the use of leverage.
- Shorting Risk: Shorting is a risky investment strategy that can result in losses if the price of the asset increases.
- Bitcoin Risk: Bitcoin is a new and untested asset class. The price of bitcoin is volatile and can go up or down sharply. This can result in losses for investors in BITI.
Final Thoughts
Shorting Bitcoin with the ProShares Short Bitcoin Strategy ETF (NYSEARCA: BITI) is an effective way to bet against the cryptocurrency in traditional markets. BITI provides investors with a simple, liquid and low-cost instrument to gain short exposure.
However, investors should understand the risks involved and proceed with caution. As always, it is important to do your own research before investing in any investment product.
Co-Founder & former Investment Banker (Finance MBA) turned Full-Time analyst and Head of Research at Buy Bitcoin Bank. Left traditional finance to pursue my interest in digital assets and decentralized finance.
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