In Brief:
- Direxion filed its first bitcoin ETF in three years.
- The ETF allows speculators to buy contracts to short the price of Bitcoin.
- It has no plans to invest directly in bitcoin.
The leading ETF issuer, Direxion, filed for an ETF that would allow speculators to purchase contracts that would short the price of Bitcoin to the US Securities and Exchange Commission on Tuesday.
It will not invest directly in Bitcoin but will maintain short exposure to bitcoin features contracts issued by the Chicago Mercantile Exchange (CME).
In this situation, shorting is a bet that the price of bitcoin futures contracts will fall over time.
The filing stated, “The Fund will generally maintain its short exposure to Bitcoin Futures during periods in which the value of bitcoin is flat or declining as well as during periods in which the value of bitcoin is rising. “
This is Direxion’s first bitcoin ETF filing in three years, following the SEC’s rejection of previous attempts.
The SEC has 75 days to respond before Direxion’s ETF goes into effect. Direxion initially filed for a Bitcoin ETF in 2018, but it was placed in the same queue as all of the other applications that the SEC had delayed at the time.
Direxion ETF also aims to invest in Bitcoin futures ETFs, money market funds, deposit accounts, etc.
Direxion’s filing to SEC is not the first one as Grayscale Investment is also planning on filing an application to convert the biggest bitcoin fund into a spot ETF.
