After recently launching the first Bitcoin ETF aimed at delivering 2x daily returns, ProShares, a leading ETF provider and asset manager, is now considering creating a comparable Ethereum ETF.
ProShares Making a Bold Ether ETF Play
Eric Balchunas of Bloomberg Senior Analysis states that ProShares has sent an application to the SEC for two Ethereum ETFs with multipliers of 2x and -2x. This step is taken since ProShares does not possess Ethereum directly but rather uses swap contracts to let investors experience the cryptocurrency.)
Furthermore, the filing bears resemblance to ProShares’ 2x Bitcoin ETF in several aspects. The ProShares UltraShort Bitcoin ETF (SBIT) and ProShares Ultra Bitcoin ETF (BITU) aim to provide investors with easy access, convenience, and efficiency when it comes to gaining leveraged or inverse exposure to Bitcoin. These ETFs stand out from the crowd, but they each serve distinct purposes.
Proshares has applied for ETFs with 2x and -2x leverage on Ethereum spot markets. However, instead of directly holding Ethereum, they plan to use swap contracts to gain exposure. This filing follows the same path as the $SBIT ETF, which was authorized to start operations 75 days after application.
— Eric Balchunas (@EricBalchunas) April 9, 2024
With BITU, investors can either aim for amplified profits linked to Bitcoin’s performance or invest with a smaller capital at risk. SBIT gives investors the chance to make profits when Bitcoin’s price decreases or protect their Bitcoin investments. (Michael L. Sapir, ProShares’ CEO)
Yesterday, Defiance Investments filed an application for a 2x leveraged Ether Futures ETF with the ticker symbol ETHL. Following this, ProShares submitted a filing for a similar 2x Ether ETF.
The ETF could start dealing in the markets by late June. Defiance recently introduced a 2X Short MSTR ETF, and this product has been criticized by Adam Back, who is the head of Blockstream.
Labeling it “awful,” Back expressed doubts about the durability of this investment strategy. He believed that simultaneously shorting MicroStrategy and betting on Bitcoin, given their strong correlation, might not be the wisest choice.
Spot Ethereum ETF Approval Odds
In recent developments, interest in the Ether ETF has surged amid hopes of SEC approval. There’s been much discussion about the SEC’s perspective on an Ethereum-backed ETF, given their ongoing attempts to classify Ethereum as a security.
It seems that the probability of ProShares and Defiance’s ETF filings getting approved is quite high. In contrast, the approval of core Ethereum ETFs remains uncertain. To reflect this ambiguity, wagers have been placed on Polymarket against Ethereum ETF approval before May 31st.
Currently, the chance of getting approved for the Ethereum ETF on the platform stands at 45%. According to the wider market regulations, the prospects for Ethereum ETF approvals are not very favorable.
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2024-04-09 22:08