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Ethereum bears gain new weapon with first ETH short ETF

Ethereum bears gain new weapon with first ETH short ETF

Amidst ongoing speculation about the potential approval of the first-ever spot Bitcoin (BTC) exchange-traded fund (ETF) by US regulators, the world of cryptocurrencies has witnessed a significant development. 

Notably, ProShares has introduced the first ETF that offers investors the opportunity to take a bearish stance on Ethereum (ETH), the second-largest cryptocurrency by market cap, Reuters revealed on November 2. 

How does it work?

ProShares, a leading issuer of ETFs, is launching a ‘ProShares Short Ether Strategy’ – an Ether futures ETF designed to deliver the inverse of the daily performance of the Standard & Poor’s CME Ether Futures Index.

Put simply, if the index drops 3%, the ProShares’ ETF will strive to return 1%. 

It is important to note that this is not an ETF tied to Ether’s spot price. Instead, it works like the majority of other crypto ETFs available in the US, focusing on futures contracts on the second-biggest crypto asset. 

The move comes, roughly a month after a batch of first Ether ETFs debuted. Out of a total of nine funds that were launched in early October, three of them belong to ProShares. However, unlike its previous two that combine exposure to both Ether and Bitcoin, the newest one provides investors with exposure to ETH only. 

Tepid debut

In contrast to its previous two funds, the launch of the ProShares Short Ether Strategy failed to attract as much attention on its first day. For comparison, the ProShares Bitcoin Strategy saw an influx of $1 billion in assets within its first couple of days, while the largest of the new Ether futures ETFs is yet to clock $10 million in assets. 

ProShares CEO Michael Sapir said the new inverse Ether investment vehicles are meant “to address the challenge of acquiring short exposure to ether, which can be onerous and expensive.”

The company also launched an inverse Bitcoin ETF, which currently manages around $74 million in assets. 

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