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Exchange-traded fund company Direxion has filed for approval to issue the Direxion Bitcoin Strategy Bear ETF, a short fund which would bascally bet that the price of Bitcoin will go down.
Like the two Bitcoin-based ETFs that recently hit the market, ProShares Bitcoin Strategy ETF and Valkyrie Bitcoin Strategy fund, the Direxion ETF would hold bitcoin futures, rather than the asset itself. But as an inverse fund, shares would gain when the price of Bitcoin fell, and vice versa.
Securities and Exchange Commission approval of the first Bitcoin-based funds for trading in the US after years of waiting was a landmark for crypto, and many other ETFs may be on the way.
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
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Launched by ETF provider Direxion, the short fund will invest in Bitcoin futures like the other Bitcoin-based funds now trading in the US.
This means investors don't actually own the underlying asset itself but rather are betting on the future value of Bitcoin.
But they make money when the price of Bitcoin rises. Short or inverse funds move the opposite way, profiting when the asset falls.
We will update this page as more details become available.
Founder & CEO at Monochrome Asset Management
For everyday investors, accumulating physical Bitcoin comes with added hurdles of custody and operational risks.
"Bitcoin as a technology is battle-tested, but there is an inherent operator's risk when self-acquiring, holding and managing a bitcoin position even for the most experienced digital native, hence there's a market for those who prefer a safe pair of hands to manage their investment in exchange for a small management fee.
"Investing in a Bitcoin ETF offers investors the benefits of a safe yet low barrier to diversifying their portfolio into the asset class since it's a well understood financial product for most investors."
The Direxion Bitcoin Strategy Bear ETF will allow investors to play the price of Bitcoin without physically owning the asset.
As a short fund, it's geared to people who want to bet Bitcoin will fall. Previously, the only ways to do this were using derivatives like futures contracts and options, which are generally only used by specialized traders.
Short funds are safer and simpler to use than those, but still generally tools for traders, not long term investing.
Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.
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