On the heels of the rollout of the first spot bitcoin ETFs, issuers are seeking to offer specialized varieties of funds—leveraged and inverse—in an effort to cater to investors hoping to capitalize on the cryptocurrency’s price swings.
Direxion, the asset manager that has $35 billion in 80 ETFs, filed Jan. 18 with the Securities and Exchange Commission to launch five leveraged and inverse leveraged spot bitcoin funds. The ETFs filed include a 2x spot bitcoin ETF, an inverse 2x, a 1.5x fund, an inverse 1.5x, and an inverse 1x fund.
ETF Issuers ProShares and REX Shares haved also filed for similar funds with the SEC. ProShares first filed for the leveraged funds on Jan. 3, while REX shared unveiled their suite of leveraged and inverse bitcoin ETFs on Jan. 16.
Spot bitcoin ETFs, which provide exposure to price swings in bitcoin rather than to bitcoin futures, began trading Jan. 11 and have proven popular with investors by quickly pulling in more than $3 billion in flows. Firms in the notoriously competitive field, already slashing management fees to gain customers, are betting on creating new products to gain market share, such as those that give investors double exposure, or inverse exposure, on the controversial commodity.
The proposed exchange-traded funds aren’t the first leveraged products from New York-based Direxion. The firm has launched a slew of leverages single stock funds, the largest being the Direxion Daily Semiconductor Bull 3X Shares (SOXL), which has about $8 billion in assets.
Spot Bitcoin ETF Race
While leveraged funds may speak to investors with a higher risk appetite, the recently rolled out spot bitcoin ETFs have garnered billions in assets in their first week of trading, surprising some cryptocurrency skeptics.
Despite investor enthusiasm for the long-awaited spot bitcoin ETFs, the price of bitcoin has pared gains that came in the runup to the products’ launch. It’s currently around $39,000, down more than 13% since January 9 when it reached its high of the year at nearly $47,000.
Contact Lucy Brewster at lucy.brewster@etf.com.