Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, evening allowing individuals to adopt market-neutral strategies. They are also a key component in the creation of many futures-backed ETFs utilized by a range of investors.
Yet asset managers have been racing to design more than 10 proposals for bitcoin funds that are currently before U.S. regulators,” reports Reuters. “New ETFs could make access to bitcoin easier and, in the case of the Direxion product, mean bigger stakes for investors, with a 25 percent gain or loss on one day doubled to 50 percent.”
In December, it was reported that Direxion rival ProShares filed plans for bitcoin ETFs, including an inverse fund. The ProShares Bitcoin ETF and ProShares Short Bitcoin ETF would track Cboe futures. Maryland-based ProShares is the largest issuer of inverse and leveraged ETFs.
Direxion also previously unveiled plans for a bullish, non-leveraged ETF based on the digital currency, the Direxion Bitcoin ETF. If regulators approve that product, it will look to “to provide total return that exceeds that of bitcoin futures contracts over a complete market cycle,” according to a SEC filing.
For more information on the cryptocurrency market, visit our Bitcoin category.