Nov 6, 2023

ProShares recently launched the ProShares Short Ether Strategy (SETH), an ETF enabling investors to take a bearish stance on ether. ProShares Global Investment Strategist Simeon Hyman discusses joins "First Mover" to discuss, as part of CoinDesk's Trading Week 2023, presented by CME Group. Hyman also discusses the road ahead for crypto-linked ETFs and bitcoin's (BTC) recent rise above $35,000.

Video transcript

A year after the fall of FTX, asset prices are rising again and the crypto industry sees fresh opportunities for growth. Coin Desk's Trading Week explores how investors are looking to get ahead and what the future holds for trading. Joining us now to discuss is Proshares global investment strategist Simeon Hyman. Welcome Simeon. Thanks for having me. All right, let's talk about this new product that proshares recently launched the first ETF enabling investors to take a bearish stance on Ether. Talk to us about why you're launching this inverse Ether product now. But look, it really continues to fill out our suite of global leading crypto linked ETF S uh recall, we're the provider of the world's largest Bitcoin linked ETF Bo. And we also have Biddy which offers short exposure to Bitcoin and, and also Betty and Beth, which are blended Bitcoin and Ether long products. And so having set the proshare Short Ether strategy, ETF continues our build out of solutions and yes, I'm sure your folks are aware, it's not so easy to uh to short Cryptocurrency. So to provide the solution, uh that's easily wasn't sold in a brokerage account, Seth and the, the ETF and the futures are on regulated exchanges. Uh, it's just a nice solution for folks who either want to hedge their portfolio or may have a bearish view. Ok. Talk to me a little bit more about how this works. Yeah, we just use, uh, ether futures to express to, to get that short, uh, exposure, uh, to ether. It's really very straightforward. You know, it's funny, uh, people talk to me all the time about Cryptocurrency and want to get into the forks and the spoons and the Hs and the quarterings. But one thing we wrote really, really well approach here is how to run ETF S based on futures. So this puts together two core capabilities for us that global leadership in crypto linked ETF S. Uh but also we're a global leader in inverse investing. What kind of demand have you seen for this product? I'm sure um you brought it to life because there is some demand out there. What are people asking for? You know, it's pretty early. So we, we're seeing in trading, but I wouldn't put any predictions behind it. Um But certainly as the market continues to expand, we think there are going to be needs for folks on both sides of the trade. You mentioned a whole basket of different ETF S here does pro shares plan on adding any more to its lineup anytime soon or are you focused on this one for the foreseeable future? We're always looking at opportunities, so I can't mention anything specifically, but uh there's no sleep for us over at proshare. So we're always looking for opportunities to create more solutions for folks. But uh we've got a pretty robust lineup of crypto linked ETF S as it is. Let's uh brought in the conversation here. Everyone's talking about that spot, Bitcoin ETF the potential for approval by the end of the year. Many are saying this could be the catalyst for the next bull market. Do you think we'll get an approval before the end of the year? We really have no idea what the is going to do. You know, I should not a couple of things that are uh you know, the rally that we've seen in Cryptocurrency. I'm not sure what you could pin it on, but it's certainly uh AAA vote towards resilience. If you think about the challenging news flow, both in terms of uh the SPF trial and other challenges in the spot in the exchange market. And you think simply of rising interest rates, these were supposed to be big headwinds. And yet, of course, we've got a, a big rally. So I think uh as an indicative potentially of broadening use in general, it's interesting, but I'm not sure that's the thing to hang your hat on. And the other thing we point out is that there are important attributes to the futures market uh that stand alongside the spot market. Uh You know, first uh futures are, you know, there's no one price for any Cryptocurrency. It's multiple exchanges. So futures reference multiple exchanges to settle. That's really important. Uh And there's a lot of, there's a lot of academic notions that information turns into price faster in the futures market. It was kind of like credit default swaps and cash bonds. A lot of times information hits price and credit the full spots uh uh quite uh more quickly than in the cash bond market. And then the other thing we just don't know in the uh ETF space, what we know is that the create redeem and market maker and authorized participants, the whole ecosystem has proven to work very, very well. Uh And, and in scale with the ITO with bit of. So, uh we're really pleased with the robustness of that solution. You know, you mentioned SPF we spent the whole top of the show talking about SPF at the end of last year. Most said that institutional institutions would be deterred from the industry after the implosion of FTX. How are institutions looking at the industry? Now? I think that your, your perspective would be a good one to add to the conversation. Yeah, I, I I'll hesitate to comment sort of in the very broadest and general sense, but I, I do want to get back to that futures market because it, it's clear, uh it, it's becoming quite clear that there's legs here, you know, the fact that Bitcoin and Ether and the Ethereum ecosystem are continuing to grow and strive with this backdrop is important, but it also leaves investors, whether they're individuals or institutions trying to figure out how they can participate. And the nice thing about the futures market is it's already a regulated mature place uh where you know, there's counter party risk is managed, you have to post margin, all that great stuff. Um So I think that's part of the equation here, the broadening adoption, the robustness, the resilience, but still some questions around the edges as to how all the little pieces are going to come together. But uh, futures are very mature and well working well oiled machine. All right, Simeon. And just before we go, we saw at the top of the show, Bitcoin broke above $35,000 early this morning. Where do you think the crypto markets are headed next? You know, the one I'm gonna do the classic strategist, comment on this and you're gonna hate me for it. I expected it. I know here's, here's the simple uh math of acid allocation. When you got a volatile thing that zigs when other asset classes zag, you've got something that can really add to portfolio efficiency when you Sprinkle just a little bit in and it's pretty darn clear. We have that with Bitcoin Ethereum. Sorry, but you knew I had to make the answer that way. But it is true. It it sounds a little, a little hokey, but it's absolutely true. Simeon, thanks so much for joining us and congratulations on the launch of your new A TF. Thank you. That was pro shares Global Investment strategist Simeon Hyman.

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