<img src="https://cryptoslate.com/wp-content/uploads/2023/11/ethereum-etf-short.jpg” />
ProShares, a prominent player in the cryptocurrency-linked exchange-traded fund (ETF) market, thrown out the first short ethereum (eth) ETF on November 2nd.
The ProShares Short Ether Strategy ETF (SETH) is the world’s first eth-linked short ETF, designed to provide investors with the opportunity to profit when the price of Ether experiences a decline.
SETH will be listed on the New York Stock Exchange and has been strategically developed to offer the inverse performance of the daily performance of the S&P CME Ether Futures Index. Like the other ProShares crypto-linked ETFs, SETH seeks exposure through eth futures contracts.
ProShares CEO Michael L. Sapir said:
“SETH is designed to address the challenge of acquiring short-term exposure to ether, which can be burdensome and expensive. With the launch of SETH today, ProShares now offers investors opportunities to profit on both up and down days of ether, all through the convenience of a traditional brokerage account.”
Risks
It is important to note that investments in cryptocurrency-related assets carry unique risks. Both bitcoin and ether, along with their respective futures, represent relatively new asset classes and are subject to rapid change and uncertainty, according to the press release.
ProShares added that its actively managed ETFs, including BITO, EETH, BETH, and BETE, face additional challenges associated with the use of futures contracts, imperfect benchmark correlation, leverage, and market price variation. These factors can increase volatility and affect performance. In particular, SETH is expected to experience losses when the daily ether futures price increases.
Investors interested in these ETFs should be aware that shares are generally bought and sold at market price, not net asset value (NAV), and are not individually redeemed from the fund. It is also essential to consider brokerage fees, which can reduce overall returns.
Moderate interest
Despite the launch of the ProShares Short Ether Strategy ETF (SETH), interest in ether futures ETFs remains subdued. The six recently introduced eth-based futures ETFs have a combined AUM of around $20 million.
Experts suggest that investors could be waiting for spot exposure to ethereum, which the SEC could consider approving in May.
The macroeconomic environment during the launch of ether futures ETFs may have contributed to its modest performance, unlike the ProShares bitcoin Strategy ETF (BITO), which debuted during a bitcoin bull period and quickly accumulated assets.
The simultaneous approval of multiple ether futures ETFs from different providers may have diluted their impact. However, the launch of SETH underscores the industry’s commitment to innovative investment opportunities linked to cryptocurrencies.
As optimism grows over the approval of spot bitcoin ETFs, spot ether ETFs are expected to follow, making ether futures ETFs potentially “obsolete.”
The SEC has until January 10 to rule on a proposed bitcoin spot ETF, and could make a decision on spot ether ETFs in May. Several companies are awaiting SEC approval for spot ether ETFs, laying the groundwork for greater diversity in cryptocurrency investments.
