Short Bitcoin (BTC) ETF Hits Over 2-Mth High As Market Slumps

By Ambar Warrick
May 7, 2022 Updated May 7, 2022
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BTC recovers from 2020 lows

An exchange-traded product that shorts Bitcoin (BTC) hit an over two-month high on Friday, as the world’s largest crypto led a sharp decline in the market.

The 21Shares Short Bitcoin ETP, which trades exactly opposite to BTC, jumped 5.4% in the past two days to its highest level since late-February. This followed a 11% slump in BTC over the same period, which saw the token hit its lowest level since the onset of the Russia-Ukraine war.

Short BTC ETP surges in value this year

The short BTC ETP, which trades on European stock exchanges, is one of the best performing assets this year. The ETP is currently trading up nearly 8% for the year, far better than returns offered by most of the top-50 cryptocurrencies.

21Shares describes the ETP as seeking to provide a “-1x return to the performance of Bitcoin for a single day.” The ETP achieves this by borrowing BTC and simultaneously selling it.

But the product is also billed as high risk by the asset manager. 21Shares recommends the product only for investors willing to take on the risk of such an endeavor.

21Shares offers a slew of ETPs tracking different cryptocurrencies. The fund manager recently launched a product that hedges both BTC and Gold in one product.

Bitcoin short interest hits near 2-mth high

A Bitfinex index that tracks short interest in BTC shows that bearish positions on the token are at their highest since mid-March. The reading comes on the heels of one of BTC’s worst tumbles this year.

The token is now trading near its lowest levels this year, between $35,000 to $36,000. Traders are anticipating further losses in the token, as inflation and monetary tightening fears show little signs of easing.

The U.S. Federal Reserve hiked interest rates this week, as did central banks in the UK, Australia, and India. Several more banks have flagged tightening measures to combat a recent surge in inflation.

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn't trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns. You can reach him at [email protected]
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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