A sudden race to create an exchange-traded fund betting against Bitcoin futures took an unexpected turn as Direxion amended an existing application to jump ahead of rival issuers.
The Direxion Bitcoin Strategy Bear ETF would offer managed short exposure to CME Bitcoin futures contracts, according to a Thursday filing with the U.S. Securities and Exchange Commission. The fund is similar to others from ProShares and AXS that are awaiting the SEC’s green light, except Direxion’s is set to go effective two weeks earlier.
That’s because Direxion re-purposed a December 2020 filing for a short tech-stock ETF into the Bitcoin fund in an SEC ‘B’ filing. B filings go effective in 60 days while ProShares and AXS’ ‘A’ filings will take 75 days to go effective, unless they request accelerated effectiveness.
“It is a tactical maneuver ETF issuers employ occasionally, in strategically important products,” Henry Jim, ETF analyst at Bloomberg Intelligence, said of the re-purposing. “There’s no guarantee it will be accepted.”
If the SEC does allow the funds to trade, Direxion’s will go effective on June 6, while those from AXS and ProShares, on June 20.
The Strategy Bear ETF is Direxion’s second attempt at launching an inverse Bitcoin futures fund. The firm filed an application for one in October, but pulled it at the request of the SEC.
In the new fund, Direxion will have a wide swath of tools to deliver the returns they are promising, including shorting other Bitcoin futures ETFs, according to the filing.
While the SEC has still yet to approve ETFs that invest directly in Bitcoin, it allowed several futures funds to hit the market at the end of 2021, including one from ProShares, which debuted as the second-most heavily traded fund on record.
Bitcoin was hovering around $43,000 Friday morning. The cryptocurrency is down about 7% year-to-date and has struggled to break past its prior highs after surging nearly 60% in 2021.
This article was provided by Bloomberg News.