Direxion, already one of the largest issuers of inverse and leveraged exchange traded funds, could add several bitcoin-related products to its lineup of leveraged funds.
Direxion is looking to introduce the Direxion Daily Bitcoin Bear 1X Shares, Direxion Daily Bitcoin 1.25X BullShares, Direxion Daily Bitcoin 1.5X Bull Shares, Direxion Daily Bitcoin 2X Bull Shares and Direxion Daily Bitcoin 2X Bear Shares, according to a recent regulatory filing.
The ETFs Direxion is planning “will offer investors the opportunity to obtain daily short, leveraged long or leveraged short exposure to the lead month bitcoin futures contract traded on the Chicago Mercantile Exchange (“CME”) or on Cboe Global Markets, Inc. (“CBOE”) or on any other U.S. exchange that subsequently trades bitcoin futures contracts,” according to the filing.
In early December, bitcoin futures launched on the Cboe followed by the CME on Dec. 18. Nasdaq plans to launch futures on the cryptocurrency later this year.
To date, bitcoin ETFs have not been approved by U.S. regulators. Several ETF issuers filed plans last year for such products, but the plans were scrapped because, at the time of those filings, there was not a bitcoin futures market.
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.