July 1st, 2022

Short Bitcoin ETF: Is BITI a good hedge against the crypto winter?

Short Bitcoin ETF: Is BITI a good hedge against the crypto winter?

Additional comments:

BITI is designed to give investors a way to profit from declines in the price of Bitcoin. It is the first U.S. fund of its kind. On hearing this before the launch, I know many naysayers were piling into this ETF to short Bitcoin. This also resulted that this vehicle is now the second-largest bitcoin-themed ETF (behind BITO) in the U.S. market with just a few days of trading.

The challenge with a short ETF is timing the market. At this moment of time, I think this ETF started off slower than expected as Bitcoin started climbing back to over $21,000. If they were to be launched in November when Bitcoin hits its all-time high at $69,000, then perhaps you will see more influx of investors jumping in.

Analysts also told me that if investors also bought into BITO and BITI, and if you time right to follow the market’s momentum, you will still be a winner. I agree and disagree with this strategy as timing is the key factor to this.

I have always thought that a spot-based Bitcoin ETF product will be launched first. By seeing another derivatives products launched before the spot-based product, this reinforces my thinking further. I think the regulators are worried about subscriptions of the spot product because they know it will be popular. That is why they approved futures-based ETF, thinking that most risk-conscious investors are unlikely to buy the futures-products. Well, based on the trading figures, I still think the demand is there and it is rising.

Will history repeat itself? Only time will tell.

Short Bitcoin ETF: Is BITI a good hedge against the crypto winter?

ProShares has launched another bitcoin-linked exchange-traded fund (ETF). This new instrument is shorting the coin amid the wider cryptocurrency bear market.

The ETF issuer previously launched a bitcoin futures ETF BITO when the cryptocurrency was enjoying record highs and risk-on sentiment was prevailing.

Both funds trade futures contracts on the Chicago Mercantile Exchange (CME). The difference is only between their short and long positions.

What is a short bitcoin ETF, and what is the long-term sentiment on its performance?

What is ProShares bitcoin ETF?

An exchange-traded fund (ETF) is a basket of securities that tracks an underlying index or instrument, if it’s passive, or it could be actively managed with fund managers picking stocks based on their analysis and financial modelling. ETF prices fluctuate throughout a trading session as they are sold and bought on an exchange.

ETFs typically contain bonds and stocks but more recently have ventured into cryptocurrency territory. Cryptocurrency ETFs were highly anticipated by the community as they aim to boost liquidity and the adoption of digital assets in the world of investing.

In order for an ETF to be established, the company willing to create a fund must file a proposal with the US Securities and Exchange Commission (SEC).

A bitcoin ETF is made up of bitcoin or instruments linked to its price. How does it work?

In theory, bitcoin tokens would have been purchased by the company that owns the fund, securitised and sold or traded on an exchange. But, the SEC is yet to accept such a proposal. The underlying assets in bitcoin ETFs are linked to bitcoin futures contracts traded on the CME.

A futures contract is a standard contract where two parties agree to exchange a specific quantity of assets on a specific day for a certain price. A bitcoin futures contract is an agreement between two sides for the exchange of a contract unit of bitcoin.

Bitcoin short ETF explained

Similarly to BITO, the ProShares Short Bitcoin Strategy ETF, BITI, trades in futures contracts on the CME. The difference is that BITI is a short bitcoin ETF, meaning that it trades short positions. BITI allows investors to profit from the falling price of the cryptocurrency, which could be used as a part of a hedging strategy.

“BITI affords investors who believe that the price of bitcoin will drop with an opportunity to potentially profit or to hedge their cryptocurrency holdings. BITI enables investors to conveniently obtain short exposure to bitcoin through buying an ETF in a traditional brokerage account,” ProShares CEO Michael L. Sapir said in a statement on 20 June 2022.

The fund tracks the nearest maturing monthly bitcoin futures contract trading on CME and is a rolling index, meaning that the index operates in accordance with a set of predetermined rolling methodology. In BITI’s case, the roll occurs over a five-day period every month, effective prior to the opening of trading and preceding the last trading date of the futures contract.

The last trading date for bitcoin futures contracts is the last Friday of the contract month. The index rolls monthly and distributes the weights 20% each day over a five-day roll period.

BITO has a gross expense ratio of 0.97% and a net expense ratio of 0.95%.

Are you wondering how to buy short bitcoin ETF? As ETFs are bought and sold on an exchange, bitcoin ETFs can be purchased via online brokers and most trading platforms.

For those investors who prefer to put their money in a mutual fund, which trades only once a day, ProShares’ affiliate mutual fund company launched a Short Bitcoin Strategy ProFund (BITIX), which has the same investment objective as BITI.

“With the additions of BITI and BITIX, ProShares and ProFunds will be the only fund families in the US offering funds that allow investors to express their view on the direction of bitcoin—no matter whether they believe the price will go up or down,” Sapir noted.

Short BTC ETF analysis

It is important to note that investing in a futures-based bitcoin ETF is not a direct investment in the cryptocurrency because the fund tracks CME BTC futures – contracts speculating on the future price of BTC rather than bitcoin itself. Investors should be aware that the price of the ETF could be different to the price of the cryptocurrency itself.

The introduction of the new short bitcoin ETF had “many naysayers were piling into [it] to short bitcoin”, said Anndy Lian, best-selling author of Blockchain Revolution 2030 and chief digital advisor to the Mongolian Productivity Organisation.

What is your sentiment on BTC/USD?

“This also resulted that this vehicle is now the second largest bitcoin themed ETF (behind BITO) in the US market with just a few days of trading.”

According to Lars Seier Christense, chairman of the Concordium Foundation and founder of Saxo Bank, “such reversed price-action investment products are well known in the traditional finance sector, and are typically used for hedging.

“Typically, they cater for investors in markets where shorting is difficult, or where they would not have a relationship with their brokers allowing them to short or where margins of such short positions are very high,” he added.

“I believe such a vehicle could become quite popular for hedging and shorting purposes, being easier to invest in than outright shorts.”

However, Lian also highlighted that the key challenge when trading short ETFs is timing the market. He told Capital.com:

“At this moment in time, I think this ETF started off slower than expected as bitcoin started climbing back to over $21,000. If they were to be launched in November when Bitcoin hit its all-time high at $69,000, then perhaps you will see more influx of investors jumping in [now, as the token has been going down].”

Dan Hoover, Director at Castle Funds, explained that the futures market in which BITI trades uses CME-listed futures, which close for an hour a day Monday through Thursday, and on Friday until Sunday (Chicago time). BTC can be bought and sold 24/7.

“This delay can create some unexpected price action in the futures as the prices ‘catch up’ to market news in Asia, especially over the US weekend. Additionally, BITI only trades on US trading days, which is even narrower than CME futures trading (9:30AM – 4PM NY time, M-F, observing most major holidays),” Hoover added.

Other competitors are spot or physically-backed bitcoin ETF projects. But, they have been pending SEC approval for a few years now.

“These ETF’s could be used to replicate the BITI strategy much more efficiently, as they avoid the compounding risks of the inverse ETF and the carrying costs of the underlying futures,” Hoover noted.

Short BTC ETF forecast

Within a day after its launch, BITI had risen to $41.3 on 22 June, up 3.6% from closing at $39.84 the day before. The fund has pulled back since and is currently (29 June) trading at $39.81.

Analysts appear to have mixed feelings on how the short bitcoin ETF will perform, as it was launched at such an uncertain time for cryptocurrencies and BTC.

In a note published on 21 June, Laith Khalaf, head of investment analysis at AJ Bell, noted that “bitcoin isn’t behaving particularly unusually and losses of this magnitude are to be expected, especially after periods of equally extreme price appreciation.”

According to Khalaf, this is not the coin’s worst performance and BTC has suffered worse “crypto winters before and come back to have its day in the sun”.

“The popularity of short BTC ETF’s, such as this latest iteration from ProShares, highlights quite how bearish a run the cryptocurrency market has been on. Short ETFs are suddenly popping up more often, as Bitcoin struggles to find a bid,” Invezz’s data analyst Dan Ashmore told Capital.com.

Long-term, Ashmore is bullish on bitcoin, however, in the short and medium-term, the ETF could perform well as the US Federal Reserve is still struggling to tackle rising inflation and a tight geopolitical situation, according to the analyst.

Saxo Bank’s Christensen agreed with Ashmore, noting that the ETF could be interesting for short-term trading.

“Unless the BTC community is completely wrong about higher levels for BTC longer-term, it would clearly not have a great investment in its own right, but more suited for short-term speculation and hedging of crypto portfolios,” he added.

Note that analysts’ predictions can be wrong. Forecasts shouldn’t be used as substitutes for your own research. Always conduct your own diligence, and remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and goals.

Keep in mind that past performance doesn’t guarantee future returns. And never invest or trade money you cannot afford to lose.

Original Source: https://capital.com/short-bitcoin-etf-explained

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j

June 8th, 2022

Four Good Reasons to Be Optimistic About Bitcoin: Is Bitcoin the cryptocurrency of the future?

Four Good Reasons to Be Optimistic About Bitcoin: Is Bitcoin the cryptocurrency of the future?

So far in 2022, the entire crypto market has been impacted by wider economic and political uncertainties, led by Bitcoin (CRYPTO: BTC), with prices down more than 50% over the past six months and the price heading for the ninth consecutive red weekly candle. And while Terraform Labs successfully airdropped new Luna tokens to previous holders, the market sentiment continues to be bearish, with the Fear and Greed Index remaining in the doldrums.

One way to avoid panic selling when the price of cryptocurrencies drop significantly is to remind yourself of the essentials, to stick to your plan and don’t invest more than you can afford to lose. Of course, that’s easy to say when you’ve lost money in Luna and seen your Bitcoin investments go down in value. However, there’s also an upside to the current market conditions as users can now buy Bitcoin at the new low price around the $30,000 mark. But no matter what level your holdings in the current market, you should be optimistic about the long term viability of Bitcoin. Here are four key reasons to consider, to help re-frame your mindset and support your belief in Bitcoin going forward.

Mass adoption of crypto assets

According to relevant data, cryptocurrencies have reached a tipping point in 2021. It has evolved from what many consider a niche investment to be a global, established asset class. Venture capitalists are pouring money into the cryptocurrency market. Among them, venture capital invested more than $30 billion in crypto assets and blockchain startups, with more than $10.5 billion in investment in the fourth quarter of 2021 alone. With an estimated $10 globally in the first quarter of 2022, reportedly the largest amount to date, and double the level for the same quarter in 2021. In fact, investment in crypto has continued to grow despite this year’s decline in Bitcoin price. “This decoupling is demonstrative of investors’ disbelief that a prolonged bear market in digital assets is forthcoming, as well as the significant amount of dry powder held by funds seeking to allocate to the sector,” said Alex Thorn, head of firmwide research at blockchain-focused bank Galaxy Digital in New York earlier this month.

Many major financial institutions are also exploring cryptocurrencies. Recently, Fidelity, the largest retirement plan provider in the US with over $4.2 trillion in assets under management, said it would allow investors to deposit up to 20% of their retirement savings in the form of Bitcoin into their accounts. While banking giant JPMorgan recently said that despite the crypto crash, its estimate of Bitcoin’s fair value is $38,000. “The past month’s crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for bitcoin and crypto markets more generally,” the bank’s strategists said. In addition, both Visa and Mastercard have launched their own crypto cards. And as the regulatory environment is catching up, ironically thanks in part due to the Terra collapse, there is reason to believe that cryptoassets will enjoy mainstream adoption in the future.

Countries adopting Bitcoin as legal tender

El Salvador was the first country to adopt Bitcoin as legal tender, led by President Nayib Bukele, but so far it remains uncertain whether the bold initiative will succeed. As reported in the Wall Street Journal on May 14, “there are no indications that Mr. Bukele plans to change course. On Monday, he said on Twitter that El Salvador bought 500 bitcoin at an average price of $30,744. “El Salvador just bought the dip!” he added.” It’s not just El Salvador, the Central African Republic also recently approved Bitcoin as its national legal tender. No one could have imagined that this cryptocurrency, which was only invented some 13 years ago, could become the legal tender of a country today. If these experiments succeed other countries may adopt Bitcoin or other cryptocurrencies as their legal tender in the future.

Is Bitcoin the cryptocurrency of the future?

One of the appeals of Bitcoin and other cryptocurrencies is that it removes friction in terms of costs and transaction speeds from payments, especially international transfers. Indeed, according to Ark Invest, cumulative Bitcoin transfers have grown by more than 463% in the last year. ARK analyst Yassine Elmandjra wrote in the report ‘Big Ideas 2022’ that Bitcoin will settle $13.1 trillion in 2021, a figure that even exceeds Visa’s payment volume.

Ark Invest’s research also highlighted several areas where Bitcoin could take market share from traditional activities. These include international remittances, emerging market currencies, institutional investment and acting as a form of digital gold. Some experts predict that if Bitcoin can make significant progress in advancing these use cases, its price could exceed $1 million by 2030.

Source: ARK Invest’s Yassine Elmandjra tweet, Jan 25, 2022

Bitcoin’s innovation continues apace

Although Bitcoin is not run by a centralized organization, it continues to grow along decentralized lines. There is a small core group of developers working on improving the network, fixing bugs and security issues, and improving functionality. For example, last year Bitcoin implemented a major upgrade called Taproot to improve privacy, scalability, and security. Another potentially significant move is the development of the Lightning Network, a layer 2 solution to Bitcoin that reduces costs and increases speed. As reported in Cointelegraph on May 30, “Bitcoin Lightning Network capacity attained an all-time high of 3915.776 BTC, as evidenced by data from Bitcoin Visuals, displaying a commitment to the cause of improving BTC transaction speeds and reducing fees over the layer-2 protocol.” This follows news from CEO of Strike, Jack Mallers, at the Bitcoin 2022 conference, that the company’s plans to collaborate with point-of-sale behemoths Shopify, NCR, and Blackhawk Network to revolutionize the payments industry. As a result, online retailers that support Shopify can now accept payments via the Lightning Network, in turn allowing US merchants to receive payments from customers globally as US dollars. As the integration of the Strike wallet is with major online players in the US economy, this could potentially do a lot for the broader adoption of Bitcoin in the retail industry.

While there are good reasons to remain optimistic about Bitcoin, there are also still many things that investors and traders need to be careful about when investing in Bitcoin and cryptocurrencies. Data in recent months confirms once again that cryptocurrencies are a highly speculative and volatile asset. Cryptocurrencies are still a relatively new sector compared to traditional investments like stocks and funds, and while we don’t have certainty exactly how it will develop in the long term the potential is clear to see. “I believe Bitcoin is a viable long term investment both as a store of value looking to the future, with the price trending significantly upwards after each halving event. But also, I’m excited about the rapid development of the Lightning Network, for both retail players but also for financial inclusion across the globe,” said BigONE Chairman Anndy Lian.

Original Source: https://www.benzinga.com/22/06/27599358/four-good-reasons-to-be-optimistic-about-bitcoin-is-bitcoin-the-cryptocurrency-of-the-future

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j

February 8th, 2022

‘Backtracking Never A Good Policy,’ Experts Comment As India’s Finance Minister Hints At Banning Cryptos

‘Backtracking Never A Good Policy,’ Experts Comment As India’s Finance Minister Hints At Banning Cryptos

My additional comments:

Stating this upfront is a good strategy. I believe FM Sitaraman is giving a warning to all that if cryptocurrencies become too out of hand, there is a chance to revise the regulations. I do not see this as bad backtracking. If you looked at it from FM’s perspective, if crypto becomes very successfully and they felt that the market is receptive, open and ready for this new digital currency, there might also be other possible incentives that can be introduced. Reducing from 30% to 10% is not backtracking right?

In my opinion, the revision is reasonable and it is an act to protect the India market. The digital rupee is not an easy task for India. India is a big economy and may need to exercise more control over its currency before adopting it to its fullest scale. Potential security issues can be a problem at the start and I urge experts to look deeper into the direct and indirect costs potentially linked to the implementation so as to allow them to drive innovation to the peak.

‘Backtracking Never A Good Policy,’ Experts Comment As India’s Finance Minister Hints At Banning Cryptos

KEY POINTS

India might ban cryptos even after taxation
India to tax cryptos at 30%
Industry seeks clarity on new announcements
‘Backtracking never a good policy’ says expert

Conflicting signals from the Indian government on the legitimacy of cryptocurrency has not gone down well with the industry. International Business Times spoke to several experts to gauge the sunrise sector’s mood and all of them asked for just one thing – clear directions from the top.

The federal budget for the year beginning April seemed to chart out a path when it imposed a 30% tax on cryptocurrencies. A few days later, however, Finance Minister Nirmala Sitharaman said she could still ban the cryptos later. Industry insiders believe that backtracking is not a good policy especially for a big economy like India.

In a recent interview to The Economic Times, Sitharaman said, “Banning or not banning will come subsequently when the consultations give me inputs. But would you say till then I do not even tax the huge profits being transacted? I will. Legitimate or not legitimate is a different question, taxing is completely my prerogative.”

Raj Kapoor, founder of India Blockchain Alliance and Chief Growth Officer at Chainsense, said, “Backtracking is never a good policy and I feel the statement should be viewed as a statement where we have taken a baby step forward but the steps and strides seem miles away.” Kapoor believes that the announcements made in the federal budget about cryptos have a lot of grey areas that needs to be addressed.

“When we say ‘ban’ crypto currencies what exactly do we ban? What are the permissible exemptions? Do we permit crypto currencies to make in platform payments the largest exemption issue? What is the manner you permit purchase of exempted cryptocurrencies for exempted use by sovereign currencies? Questions galore, solutions in the grey,” he told International Business Times.

Shivam Thakral, chief executive officer of Indian exchange BuyUcoin, believes that the finance minister might be referring to a “worst-case scenario like when most (Financial Action Task Force) member-countries decide to ban crypto.”

“There’s also a burgeoning concern among global regulatory watchdogs that crypto can have an adverse impact on economic stability in countries like India. We’re really optimistic that the government of India will address these concerns and bring in a strong regulatory framework to tackle all these issues to become global leaders in crypto & blockchain industry,” Thakral told International Business Times.

On the other hand, Anndy Lian, chairman of BigONE Exchange, believes that stating upfront that the government might ban cryptos later is a “good strategy.”

“I believe FM Sitaraman is giving a warning to all that if cryptocurrencies become too out of hand, there is a chance to revise the regulations. In my opinion, the revision is reasonable and it is an act to protect the Indian market,” Lian told International Business Times.

India has decided to introduce a 30% tax on cryptos and plans to work on a digital rupee backed by blockchain beginning the financial year starting April.

“The quantum of taxation is something that is discouraging. Also, specific sections regarding TDS are still confusing. This might act as a dampener for greater adoption,” Gupta told International Business Times.

“We must remember this is just the beginning of the larger process of adoption, multiple discussions are needed to come up with better systems or processes. But we are very hopeful that right actions will be taken,” he said.

Original Source: https://www.ibtimes.com/backtracking-never-good-policy-experts-comment-indias-finance-minister-hints-banning-3391556

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j