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ProShares Introduce SETH, World’s First Ethereum Inverse ETF

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ProShares has taken a groundbreaking step in the world of cryptocurrency investment by introducing the first-ever Ethereum inverse ETF. Known as the ProShares Short Ether Strategy ETF, and traded under the ticker symbol SETH, this innovative ETF aims to generate returns inversely correlated to the daily performance of its underlying index, the Standard & Poor’s CME Ether Futures Index. What sets SETH apart from other ETFs is its focus on the inverse movement of Ethereum’s price. In simpler terms, this means that as the price of Ethereum decreases, the value of the ETF increases, making it an attractive option for investors with a bearish outlook on Ethereum’s future.

This introduction comes at a time when traditional spot ETFs are still awaiting approval from the US Securities and Exchange Commission. SETH offers investors a unique opportunity to engage with the volatile crypto market without the complexities of directly shorting the asset. Listed on the New York Stock Exchange, SETH marks ProShares’ pioneering venture into the world of inverse ETFs.

Ethereum

The launch of Ethereum ETFs began in early October, with ProShares unveiling three out of a total of nine new products. However, the initial response was lukewarm compared to the enthusiastic reception received by their Bitcoin Strategy ETF in the past. Michael Sapir, the CEO of ProShares, emphasized SETH as a solution to the challenges associated with obtaining short positions in Ether, which often involve cumbersome and costly processes. Sapir stated that SETH was specifically designed to simplify the process of acquiring short exposure to Ether, making it more accessible for investors.

ProShares Forefront In Diverse ETFs Launch

ProShares, a prominent player in the crypto-linked ETF market, has been leading the ETF revolution since 2006. The company boasts one of the most extensive ETF lineups and manages over $60 billion in assets, along with its affiliates. This recent development follows ProShares’ previous successes in the cryptocurrency market.

In June, the company introduced its first short bitcoin-linked ETF in the United States, trading under the ticker BITI. Moreover, in October 2021, ProShares made history by launching BITO, the first US bitcoin-linked ETF, amassing over $1 billion in assets within just two days of its release. Additionally, the ETF issuer pioneered the creation of the first BTC-linked mutual fund, BTCFX, in July 2021, further solidifying its position as an innovative leader in the cryptocurrency investment landscape.

Ethereum Futures ETF Race Heats Up: Six Companies Vie For Approval

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In the latest developments within the crypto investment landscape, it has been reported by Eric Balchunas, a prominent senior ETF analyst at Bloomberg, that six noteworthy companies have officially entered the race to launch Ethereum futures exchange-traded funds (ETFs). This significant move signals a growing interest in expanding investment opportunities within the realm of cryptocurrencies.

The companies vying for regulatory approval and subsequent issuance of Ethereum futures ETFs include Volatility Shares, Bitwise, Roundhill, VanEck, Proshares, and Grayscale. These firms have submitted formal applications for their respective ETF offerings, seeking to expose investors to Ethereum futures contracts.

Strategies For Tracking Ethereum Futures Contracts

The submitted ETF proposals exhibit varying strategies and approaches for tracking Ethereum futures contracts. Below is a summary of the companies, their respective ETF tickers, strategies, and the status of their applications:

  1. Volatility Shares – Ether Strategy ETF (ETHU)
    1. Derivatives-Based Replication Strategy
    2. Filing Date: 7/28/2023
    3. SEC Approval Status: Awaiting Approval, Target Date: 10/11/2023
  2. Bitwise – Bitwise Ethereum Strategy ETF
    1. Futures/Derivatives-Based 1940 Act
    2. Filing Date: 8/1/2023
    3. SEC Approval Status: Awaiting Approval, Target Date: 10/16/2023
  3. Roundhill – Roundhill Ether Strategy ETF
    1. Futures/Derivatives-Based 1940 Act
    2. Filing Date: 8/1/2023
    3. SEC Approval Status: Awaiting Approval, Target Date: 10/16/2023
  4. VanEck – Proshares Ethereum Strategy ETF
    1. Futures/Derivatives-Based 1940 Act
    2. Filing Date: 8/1/2023
    3. SEC Approval Status: Awaiting Approval, Target Date: 10/16/2023
  5. Proshares – Grayscale Ether Strategy ETF
    1. Futures/Derivatives-Based 1940 Act
    2. Filing Date: 8/1/2023
    3. SEC Approval Status: Awaiting Approval, Target Date: 10/16/2023
  6. Grayscale – Grayscale Ether Strategy ETF
    1. Futures/Derivatives-Based 1940 Act
    2. Filing Date: 8/1/2023
    3. SEC Approval Status: Awaiting Approval, Target Date: 10/16/2023

These applications signify the ongoing efforts by various financial institutions to introduce more accessible avenues for traditional investors to participate in the evolving cryptocurrency market. 

The anticipation now rests upon the Securities and Exchange Commission (SEC) to evaluate and approve these proposals, potentially paving the way for a new wave of Ethereum futures ETFs and broader cryptocurrency investment options for interested investors.

Meanwhile, Balchunas also introduced the world’s first billion-dollar single stock ETF, $TSLL, noting its remarkable popularity despite offering just 1.5 times exposure. Balchunas revealed that a significant portion of the asset under management (AUM) comes from appreciation, with less than half stemming from flows. 

Notably, this ETF earned a spot on the July Outliers list due to its impressive $200 million influx through Sebastien Cabral, an equity research associate for Bloomberg and Bloomberg Intelligence. This revelation underscores the evolving dynamics of ETF investing, with $TSLL emerging as a noteworthy example of substantial growth driven by both investor interest and asset appreciation.

Related Reading | Microstrategy Suffers After Bitcoin Price Dips, Holders of Pomerdoge Are Increasing Their Holdings As Price Surge Expected

US’ First Bitcoin-Linked ETF Records Largest Ever Weekly Inflow Of $65.3M

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ProShares Bitcoin Strategy ETF [BITO], the first BTC-linked ETF in the United States has recorded the largest weekly inflow in a year at $65.3 million with its assets topping $1 billion, senior analyst Eric Balchunas noted.

Although BITO has underperformed BTC year-to-date, the asset notched over a 3% gain on the day, reaching $17.57, according to Yahoo Finance.

The development signifies a revival of these asset classes supported by a rise in institutional investors’ capital inflows.

Following a week of legacy institutions showing interest in financial instruments, BTC held ground above $30,000.

Most importantly, the U.S. Securities and Exchange Commission [SEC] gave thumbs up to the nation’s first leveraged BTC futures ETF offered by Florida-based Volatility Shares.

Securities like equities and commodities are bundled together in an ETF, or exchange-traded fund. Without directly owning the securities, investors can obtain exposure to them by purchasing shares of an ETF. There are two primary categories of Bitcoin ETFs: futures and spots.

The BITX fund for one, will be a leveraged ETF. Leveraged funds boost an index’s returns by using debt or financial derivatives, in this case, Bitcoin futures. Investors may see both short-term gains as well as suffer significant losses.

According to the BITX fund’s website, the “2x BTC Strategy ETF” is slated to go live on June 27 on CBOE BZX Exchange.

Meanwhile, Bitcoin decreased marginally by 1% to $30,416 over the last 24 hours to 7:30 a.m. in Hong Kong per CoinMarketCap. The market capitalization of the largest crypto in the world has however gained more than 15% over the past week.

Bitcoin ETFs Market Has Heated Up

Also, for the first time in months, BTC’s total market cap crossed above 50% on June 19, data from Tradingview showed.

This comes after a slew of applications filed by investment firms such as BlackRock, WisdomTree, and Invesco with the SEC to launch spot Bitcoin ETFs. While the regulator has granted permission to a number of futures-based crypto ETFs, it has yet to approve spot products.

After the SEC sued two of the biggest cryptocurrency exchanges earlier this month, legalizing BITX is nevertheless considered a breath of fresh air for the digital asset sector. Gary Gensler, the head of the regulatory body, has established himself as a steadfast opponent of cryptocurrencies.

ProShares Debuts First Short Bitcoin ETF [BITI]

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ProShares is all set to unveil its first short bitcoin-linked ETF in the United States under the ticker BITI. The new fund will go live on the New York Stock Exchange NYSE.

According to the press release, BITI will provide investors a chance to profit from Bitcoin’s price dip or protect market exposure with the convenience of an ETF. Speaking of the new launch, ProShares CEO Michael L. Sapir stated,

“As recent times have shown, bitcoin can drop in value. BITI affords investors who believe that the price of bitcoin will drop an opportunity to potentially profit or hedge their cryptocurrency holdings. BITI enables investors to conveniently obtain short exposure to bitcoin through buying an ETF in a traditional brokerage account.”

Back in October 2021, ProShares created history when it successfully launched BITO, the first U.S. bitcoin-linked ETF, raking over $1 billion in assets in just two days.

The leading ETF issuer also curated the first BTC-linked mutual fund, BTCFX, in July 2021.

However, Bitcoin ETFs were being bamboozled as stocks trade sharply lower amid fears of a looming recession, with investors anticipating that the Federal Reserve may adopt a more hawkish stance by raising rates to curb surging inflation.

ProShares ETFs value dropped by 70%  

Last week, the performance of these exchange-traded funds that track Bitcoin through managed futures contracts was at their worst as these asset classes were trading all-time lows in the wake of a severe downswing in the crypto market.

As per various reports, the ProShares Bitcoin Strategy ETF, in particular, has fallen almost 70%.

In addition to that, other top ETFs Valkyrie Bitcoin Strategy ET and VanEck Bitcoin Strategy ETF have all hit record lows in the wake of the mega BTC selloff.

Bitcoin has dropped 69% from its previous peak, falling 55% this year alone, as as result the ETFs troupe went belly up.

The report also notes that the popular Grayscale Bitcoin Trust has been trading lower this year, by 60.1%. That’s not its lowest level on record, but it is a 20-month low for the fund.