ETF Edge: Tom Lydon on Shorting Bitcoin and Rethinking Crypto

With bitcoin in freefall, at almost 70% off its historic high hit from back in November 2021, the question is whether it’s time for a short bitcoin ETF. Simeon Hyman, the global investment strategist at ProShares, joins CNBC’s Bob Pisani on this week’s “ETF Edge,” along with VettaFi vice chairman Tom Lydon to discuss how to handle the crypto crash with a new fund and more.

Explaining how the ProShares Short Bitcoin Strategy ETF (NYSE: BITI) works, Hyman notes that it serves as the companion to BITO, which relied on futures and was hugely successful last fall. With BITI, it allows investors to invest in short exposure and is rebalanced every day.

As Lydon notes, while many thought it would be a way to diversify and fight inflation, that hasn’t been the case. However, advisors have found themselves interested in crypto ETFs because they can keep them on the platforms where they manage money for their clients. There’s no need for an options, margin, or futures account, or a need to monitor or maintain margin levels. Investors will never lose more than they have invested.

“More and more advisors and their clients are interested in cryptocurrency ETFs,” Lydon states, based on survey results. “Now, with the fact that we’ve got ETFs and they are available on platforms, and we’ve had a great decrease in the value of ETFs, more advisors are getting in.”

Hyman adds, “The futures market has really matured quite nicely, so those roll costs that people were concerned about have actually shrunk in sharp contrast to the spot market.”

By putting the futures with the clearing house, in conjunction with a 40-act ETF with segregated assets readily available, it’s certainly no real surprise that it’s an opportunity well suited to financial advisors and anyone looking to simply have this exposure to their brokerage account.

While Fed Chairman Gensler pointed out earlier today that crypto tokens would fall under the FCC’s jurisdiction, though no mention of the bitcoin ETF. for Hyman, there’s still no real certainty on seeing a spot bitcoin ETF come to fruition.

“The one thing that we do know is that futures have become a particularly effective method for exposure that is becoming more mature, more effective, and more efficient for the marketplace.”

For more news, information, and strategy, visit VettaFi.com.