- The ETF provide access to the inverse of Standard & Poor's daily performance
- ProShares launched three ether ETFs at the beginning of last month
- The new product is not tied to ether’s spot price, but to its futures contracts
ProShares has launched the first exchange-traded fund (ETF) that lets investors wager on a bearish development of the price of ether, the world’s second-biggest crypto by market cap, Reuters reported, citing a company publication from Thursday, November 2.
ProShares created a Short Ether Strategy to provide access to the inverse of Standard & Poor’s CME Ether Futures Index’s daily performance. The ETF will aim to return 1% if the index drops by 1%.
Ether can be a lucrative investment
Ether futures ETFs can have spectacular returns. After Ethereum implemented the highly-anticipated Shanghai upgrade on April 12, adoption of ether skyrocketed. The number of open ether futures contracts on the Chicago Mercantile Exchange (CME) increased by 39% in just over a week.
Ether ETFs may be a fact, but still no spot bitcoin ETFs
ProShares launched three ether ETFs at the beginning of last month; six others were introduced as well. The first of the three only offers exposure to ether. The other two combine exposure to ether and bitcoin.
ProShares’ ETF’s debut was modest, particularly when compared to that of its Bitcoin Strategy ETF. Within a few days of its launch, it had amassed about $1 billion in assets. The assets of the biggest new ether futures ETF are less than $10 million.
Effect of spot ETF approval on Bitcoin price
The new product is not tied to ether’s spot price, but to its futures contracts. The US Securities and Exchange Commission (SEC) has not approved any spot bitcoin ETFs yet. When this happens, Bitcoin’s price is expected to rise at first, but then either retreat or move sideways.
According to Michael Sapir, CEO of ProShares, the new bearish ether ETF is designed to rise to the challenge of obtaining short exposure to ether, which can be costly and “onerous.”
The assets of ProShares’ inverse Bitcoin ETF, ProShares Short Bitcoin Strategy, amount to about $74 million.
A smart choice
According to VettaFi head of industry research Roxana Islam, ProShares has made a reasonable choice in introducing an inverse ether product because a spot product cannot easily replace or displace that type of inverse strategy. This is notwithstanding the market’s eager anticipation of SEC’s long-overdue approval of spot-based cryptocurrency ETFs.
