Short Bitcoin ETF records $ 88 million inflows over 4 weeks

Data released by CoinShares reveals that short Bitcoin exchange traded funds (ETFs) continue to dominate the inflow of investment products for digital assets. These products received $ 15 million in inflows last week, bringing total investment in the asset class to a record $ 88 million (61% of AUM) in the last four weeks.

Investors continue to favor short positions

In the midst of the current cryptocurrency market winter, investors are increasingly favoring short-Bitcoin positions. Following an increase in demand for a short-term investment product and the subsequent launch, investors have continued to pour in their money.

Recently, the first short Bitcoin exchange traded product (BITI) in the US was launched by Proshares. The fund allows investors to bet on the price of the most popular cryptocurrency, a bet that can be difficult and expensive. This is due to the strict regulations imposed by cryptocurrency exchanges, which makes it difficult to short spot Bitcoin.

Furthermore, the financing costs associated with conventional methods for achieving short exposure can vary from 5% to 20%. This makes BITI a more economical strategy as it charges a cost share of 0.95%. As a futures-based ETF, BITI aims to track the performance of the S&P CME Bitcoin Futures Index.

After a weak debut on the New York Stock Exchange (NYSE), the fund saw a staggering 380% volume increase the next day. This highlighted a strong demand for the products as investors continued to invest in Bitcoin. Thereafter, it has continued to dominate the total supply of Digital Asset Funds each week, up from 79% in the first week of July.

Consequently, data for last week show that investments in digital asset products amounted to $ 12 million, of which $ 15 million went to short-term investment products. Meanwhile, net outflows for long-term ETFs were $ 2.6 million, with assets under management (AUM) rising 11.4% from $ 17.8 billion in June.

Despite the increase in AUM, investors continue to increase their short positions in Bitcoin. This has brought inflows of short Bitcoin products to a record four-week run of a total of $ 88 million and 61% of the total AUM.

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Short Bitcoin supply may decline in a bull run

With the entire crypto market in a bear race, short Bitcoin ETFs are helping investors profit from the falling prices of Bitcoin. But in a bull run, the influx to them will fall significantly as investors resort to long-term investment products when investing in Bitcoin.

The inverted nature of short Bitcoin products makes them suitable for bear markets and unsustainable in beef markets. They are suitable for investors who intend to profit from a price drop. For example, when the price of Bitcoin falls by 20%, the value of a short Bitcoin product will rise by 20% and vice versa.

Therefore, investors will turn to long ETF products in a bull run, which is directly related to the base index. However, investors who want to hedge their long positions against a downturn can also use short ETFs in a bull market.

While short Bitcoin ETFs saw significant inflows, multi-asset investment products continued their strong bear market development. With an inflow of $ 2 million, the total for the year increased to $ 219 million, well above any other asset class.

Meanwhile, altcoins were relatively quiet, with Solana accounting for the only significant inflow, which amounted to $ 0.5 million. A three-week series of inflows into Ethereum was also broken by small outflows totaling $ 2.5 million. In total, the volume of investment products was only $ 1 billion last week, much lower than the weekly average of $ 2.4 billion last year.

Do you think Short Bitcoin ETFs will continue to take most of the supplies to Digital Asset products as the bear market continues? Let us know your thoughts in the comments below.

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