The cryptocurrency crash has boosted interest in bearish bitcoin ETFs, and the ProShares bearish bitcoin strategy ETF (BITI) has seen massive inflows every day since its launch more than a week ago.
Interest in the ProShares inverse ETF, which allows investors to bet on a drop in bitcoin prices, saw 1,684 bitcoin inflows on Wednesday, according to data from crypto analytics firm Arcane Research cited by Forbes.
According to the report, BITI inflows have jumped to 3,086.2 BTC, bringing the fund’s holdings to around $59 million. The ProShares Short Bitcoin Strategy ETF thus becomes the second largest BTC-linked ETF in the US.
Why Investors Are Shorting Bitcoin
According to the analyst firm, if BTC falls by 1% in value, the demand for inverse instruments increases, giving investors a 1% profit, which is attributed to Bitcoin’s high correlation with stocks. The firm also pointed to inflation and ongoing volatility in the crypto market as key factors why traders liked the move.
Arcane Research analyst Vetle Lunde told Forbes that short-seller demand is on the rise as more investors look to hedge against the current decline, or simply realize there is an opportunity to benefit from the crash.
Notably, Wednesday’s inflows coincided with the U.S. Securities and Exchange Commission’s (SEC) rejection of a Grayscale spot bitcoin ETF proposal. Grayscale has filed a lawsuit with securities regulators.
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