New Bitcoin ETF Offers Shorting Bitcoin Futures, Creators Warn of Multiple Risks

New Bitcoin ETF Offers Shorting Bitcoin Futures, Creators Warn of Multiple Risks

According to an article by Bloomberg, a new Bitcoin ETF if approved will enable traders to short Bitcoin futures. The filing was submitted on Tuesday, October 26.

A new ETF seeks to bet against Bitcoin futures contracts—and says its investors should be willing to lose everything— Bloomberg Crypto (@crypto) October 27, 2021

Direxion wants to launch Bitcoin futures ETF for short sellers

Bloomberg has written that on October 26, Direxion submitted documentation to launch the Direxion Bitcoin Strategy Bear ETF. Last week, two ETFs that track the performance of Bitcoin futures were launched by ProShares and Valkyrie.

Now, the BTC futures ETF industry in the US may reach a new milestone, if the launch of the ETF for bears is approved by the US Securities and Exchange Commission.

The debuts of Bitcoin futures products last week prompted Bitcoin growth to almost $67,000 and reach a new all-time high.

However, today, the flagship cryptocurrency retreated below the $60,000 level as a mind-blowing half-a-million worth of liquidations was conducted across major exchanges – Binance, Bitfinex, OKEx, Huobi, etc.

Slightly over $500 million worth of those crypto liquidations were long positions.

BITO ETF gains $1 billion in just two days

ProShares Bitcoin ETF last week became the second most traded asset on the NYSE on the first day of its trading. 10,100 buy orders were placed on BITO (the ticker the ETF goes by) and seven times more orders were placed to sell it.

After trading for two days, BITO reached $1 billion in the net asset value. That's the equivalent of the net asset value of several Canadian Bitcoin ETFs that have been trading for a while already.

Direxion fund bears lots of risks

The new Bitcoin ETF filed for by Direxion bears numerous financial risks for short sellers, the company warns. Trading this ETF may lead to shorters getting wiped out, Bloomberg writes, and Bitcoin massive price swings would be a problem here too.

The SEC filing states that if you are not prepared to lose all your funds by investing in this ETF, you should not bet on it.

This week, some in the crypto community also expect another Bitcoin futures ETF to kick off – the one filed for by VanEck asset manager.