Bitcoin’s Surge Shakes Up ETF World: Who’s Soaring And Who’s Crashing?

A ripple of excitement has recently coursed through the crypto market, particularly on Bitcoin. Bolstered by speculation regarding the impending approval of a spot Bitcoin exchange-traded fund (ETF) —a sentiment propelled by BlackRock’s iShares ETF’s appearance on the DTCC website—Bitcoin recorded an 18-month high trading above $35,000.

This upward movement came on the heels of a notable 10% surge on Monday.

Contrary to the general jubilance, not all BTC-related financial instruments are shared in the celebration. The ProShares Short BTC Strategy ETF, designed for traders banking on a decline in Bitcoin futures, grappled with a record low.

Just over a year ago, this fund basked in the glory of a peak value of $45.61; a zenith reached as crypto assets took a downturn in the aftermath of FTX’s collapse.

However, this year, the ProShares Short Bitcoin Strategy ETF has faced challenges, its value diminishing by 59.3% to stand at $16.68, a historic nadir, at the time of writing.

This dip didn’t deter investors. Despite the drop, the ProShares Short BTC ETF, boasting net assets of $62.98 million, is poised for its second consecutive month of inflows, according to data from Lipper.

Lucas Kiely, the Chief Investment Officer at digital wealth platform Yield App, offered a perspective on this trend. He posited that the market might be “buying the rumor and selling the fact.” Kiely further elaborated that the BTC short ETF provides investors a unique opportunity to speculate on a potential BTC sell-off.

The Chief Investment Officer noted:

A lot of people think this rally is a short squeeze – we have no real news coming out and a lot of anticipation around the SEC’s approval or disapproval of these spot ETFs and people are getting ahead of themselves. Ultimately, the market is again buying the rumor and selling the fact and the BTC short ETF is the only way for investors to express the view BTC is going to sell off.

Furthermore, Kiely suggested another motive behind investors’ moves. With the surge in BTC’s value, some might be seeking to “lock in” their profits and, hence, are turning to the ETF as a hedge against potential future downturns.

Conversely, some BTC-associated ETFs rode the wave of optimism. The ProShares Bitcoin Strategy ETF, mirroring BTC futures alongside the Valkyrie Bitcoin Miners ETF, registered gains of 7.68% and 6.54%, respectively, over the past day. 

Leading the pack among recently introduced funds that track Ethereum (ETH )futures was the Valkyrie Bitcoin and Ether Strategy ETF, with a commendable 7.64% uptick over the same period.

Furthermore, BTC has retraced from its recent traded high of $35,000 and currently trades at $33,746, at the time of writing, still up 9.2% in the last 24 hours.

Featured image from Unsplash, Chart from TradingView