Summary ProShares Shrt Bitcoin ETF aims to achieve daily investment results that correspond to the inverse (-1x) of Bitcoin's daily performance. The ETF provides a way for investors to profit from declines in Bitcoin pricing, offering a hedge or speculation against cryptocurrency market downturns. One of my favorite momentum-based trading formulas flashed a buy signal for BITI at the end of last week. This investment vehicle is designed for short-term trading and is not suitable for long-term holds due to the costs associated with creating its inverse positioning. I have a very useful and successful momentum formula that just flipped to a buy signal on ProShares Shrt Bitcoin ETF ( BITI ). This fund uses futures contracts to create a short position that will benefit owners if Bitcoin declines. So, if you have been searching for a way to play a correction or bear market in the bubble move for Bitcoin, BITI is the plain-vanilla choice for retail investors inside a normal brokerage portfolio (usually available in IRA and 401-k accounts). StockCharts.com - Bitcoin in U.S. Dollars, 2 Years of Daily Price & Volume Changes ProShares Short Bitcoin Background ProShares opened this ETF for business in June 2022, once futures were approved for trading. After the wicked "inverse" decline in the fund, going in the opposite direction of Bitcoin's monster gains of 2023-24, total assets under management have fallen to $98 million. The fund does charge 1.03% in fees annually to manage its holdings and list the fund. The ProShares website explains the investment objective as this, Pro Shares Short Bitcoin ETF seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the Bloomberg Bitcoin Index. The website also does a good job of exploring the risk of investment loss, which has been a regular occurrence since Bitcoin only seems to rise in price the last couple of years. ProShares Website - BITI Risks Explained, February 22nd, 2025 ProShares Website - BITI Risks Explained, February 22nd, 2025 ETF holdings are quite simple to understand as of Friday's close (February 21st, 2025), with two futures contract expirations shorted, alongside cash held as collateral to create the inverse -1x position. The good news in today's financial market structure is cash investments do earn interest for ETF owners. ProShares Website - BITI Positions, February 21st, 2025 The bad news (and only realistic drawback to holding a BITI stake outside of Bitcoin prices continuing to zigzag higher) is Bitcoin futures participants put a nice premium value on contracts further out in time in anticipation of new cryptocurrency gains. This " contango " price condition costs extra money to generate BITI's -1x leverage, with monthly rollovers hurting the value of BITI. It has to do with crypto investment sentiment being uber-bullish today. If conventional wisdom flips to bearishness, with futures preparing for a bust, the opposite situation of futures selling for a discount to spot prices would appear ( backwardation ). CME Futures Exchange - Bitcoin Futures Pricing, February 21st, 2025 BITI Performance vs. Bitcoin The best way to describe how this short ETF works for investors in the real world is through a review of past trading. The ETF has paid out a dividend from cash interest coming in the door at a faster clip than management fees are being expensed (since December 2022). So, I will use total return comparisons vs. Bitcoin price changes. The main advantage of owning BITI vs. shorting futures directly is the design limits losses to -100% of your invested capital. If you are wrong on a short Bitcoin position in futures, you can lose many times your initial investment, where your broker requires you to add new money to keep your position. This concept is visible on the performance chart since inception below. Against the +368% Bitcoin gain since June 2022, BITI has declined just -87.6% in price. I know that's not the kind of loss anyone shoots for, but the idea of "limited" losses is fully on display. YCharts - BITI vs. Bitcoin, Total Returns, Since June 2022 That's not to say upside is limited in BITI. In fact, if Bitcoin were to collapse in value during 2025, the daily rebalance design of BITI could actually help compound gains in your favor, especially over shorter spans between futures contract rollovers. I am charting periods of sharp Bitcoin decline vs. BITI's oversized gains below. YCharts - BITI vs. Bitcoin, Total Returns, August 12th, 2022 to September 6th, 2022 YCharts - BITI vs. Bitcoin, Total Returns, April 11th, 2024 to August 5th, 2024 Latest Performance Stats In fact, BITI has performed quite admirably over the last four weeks, as the Trump-inspired euphoria in Bitcoin seems to be ebbing. YCharts - BITI vs. Bitcoin, Total Returns, 1 Month In general, the daily rebalance feature alongside cash interest have helped BITI to "outperform" its basic 1:1 design over the past year (albeit with major losses for the buy-and-hold crowd owning it greater than three months). YCharts - BITI vs. Bitcoin, Total Returns, 3 Months YCharts - BITI vs. Bitcoin, Total Returns, 6 Months YCharts - BITI vs. Bitcoin, Total Returns, 1 Year Final Thoughts In conclusion, if you are bullish on Bitcoin, please avoid this product. However, if you are looking for an angle to bet on a Bitcoin correction or even an all-out bust in 2025, BITI should absolutely be on your research list. Again, my plan is to buy a BITI position early next week, as one of my favorite momentum trading formulas is screaming now is a solid risk/reward moment to do so. An important trigger for my formula is a security's price getting back above its 50-day moving average, after suffering a major decline. While not expressly part of the formula, having rising trends in the Accumulation/Distribution Line , Negative Volume Index and On Balance Volume indicators over the past month are also a positive development. StockCharts.com - BITI, 12 Months of Daily Price & Volume Changes I cannot guarantee any type of positive return or trading profit, but the odds seem to favor at least a minor drop in Bitcoin over coming weeks, with a bump higher in BITI the likely reaction. It's entirely possible I will take a quick +10% to +20% gain in BITI, if such appears into March. Historically, holding this ETF longer than a few months has not outlined serious gains during Bitcoin's boom move in price. And, Bitcoin futures contract premiums do pose a stiff headwind currently in the marketplace. To achieve a +30% or better return in BITI, Bitcoin would have to drop by around the same amount, which may happen eventually, if and when Bitcoin busts. To me, this idea is more of a trade. I do not suggest holding BITI longer than several months. If you will, investors can just assume a defined sell date is appropriate, like a stop-loss idea, 6–8 weeks in the future. At that time, you sell your position, no matter the profit/loss level or your personal outlook for Bitcoin. Having an exit plan in leveraged ETFs is just as (if not more) critical as entering a buy decision. As a consequence, I have a 12-month outlook of Hold for the ProShares Short Bitcoin ETF. In addition, I would not be surprised by some sort of loss being the final destination for BITI trust holders by the end of 2025. Thanks for reading. Please consider this article a first step in your due diligence process. Consulting with a registered and experienced investment advisor is recommended before making any trade.
