The financial products provider Direxion applied this week to the United States Securities and Exchange Commission (SEC) for the approval of an exchange-traded bitcoin (BTC) fund (ETF), but inverse, that is, that will be valued in the meantime BTC to fall.
According to the prospectus that the company submitted to the SEC on Tuesday, August 26, it is a Bitcoin futures ETF -1x, called Direxion Bitcoin Strategy Bear ETF, which would be the first from United States (USA).
They explain that the ETF will trade and be listed on the New York Stock Exchange and that there is no guarantee that the fund will achieve its investment objective. Even warn that money can be lost.
At the moment, it is one of the many applications that are deposited with the SEC, which has so far approved only three Bitcoin futures ETFs. In fact, one of them influenced the all-time high in the price of the leading cryptocurrency, which is currently around $ 59,000, as suggested by the CryptoNews Price Calculator.
Furthermore, they let it be known that the fund “does not invest or seek a short exposure to the current spot price of bitcoin”, thus inviting investors interested in this product to “consider an investment other than the fund.”
Direxion clarifies that Bitcoin futures, as well as Bitcoin per se, are relatively new and risky investments “Unique and substantial”, highlighting price volatility.
The value of an investment in the fund could decrease significantly and without warning, even to zero. You must be prepared to lose your entire investment. The performance of bitcoin futures contracts and therefore the performance of the fund can differ significantly from the performance of bitcoin.
Direxion, provider of financial products.
They further note that the Fund does not invest or own Bitcoins directly and that the futures price should be expected to differ from the current cash price of BTC, which is sometimes referred to as the price. “cash”.
The new SEC approval request comes just when, in a matter of days, at least three ETFs futures markets debuted on Wall Street, with products from ProShares, Valkyrie and VanEck.
The Fund does not invest or own bitcoins directly / Source: Direxion Prospectus.
A ‘reverse’ Bitcoin ETF already exists, but in Canada
It is not the first time that there has been talk of a Bitcoin ETF that makes money when the price of the cryptocurrency goes down. In April, a new BTC-based “reverse” fund debuted on the Toronto Stock Exchange in Canada. The manager of the investment fund is the company Horizons ETFs Management (Canada) Inc, as reported by ..
At the time, it was the first ETF with a Bitcoin inverse investment fund, in the sense that investors participate with fiat currency against the price of BTC, and not with bitcoin, as is usually done in derivatives markets such as those provided. by Binance, Huobi or Okex.
According to Eric Balchunas, who is a senior ETF analyst at Bloomberg, the Canadian product is currently “destroyed,” but it still performs well when it has to, up 52% in 6 weeks earlier this year.
52% growth of the “inverse” bitcoin ETF traded on the Toronto Stock Exchange / Source: Eric Balchunas.
ETF competition in the US for better rates
In what appears to be a boom in ETFs, a financial instrument now in vogue with investors, there is strong competition in the US, especially for cheaper rates.
We report in ., that, according to the Financial Times, ETF fees would be the new battle front to gain interest from large capitals. These would be looking to have exposure in Bitcoin through this class of financial instruments.