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ProShares Introduce SETH, World’s First Ethereum Inverse ETF

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ProShares has taken a groundbreaking step in the world of cryptocurrency investment by introducing the first-ever Ethereum inverse ETF. Known as the ProShares Short Ether Strategy ETF, and traded under the ticker symbol SETH, this innovative ETF aims to generate returns inversely correlated to the daily performance of its underlying index, the Standard & Poor’s CME Ether Futures Index. What sets SETH apart from other ETFs is its focus on the inverse movement of Ethereum’s price. In simpler terms, this means that as the price of Ethereum decreases, the value of the ETF increases, making it an attractive option for investors with a bearish outlook on Ethereum’s future.

This introduction comes at a time when traditional spot ETFs are still awaiting approval from the US Securities and Exchange Commission. SETH offers investors a unique opportunity to engage with the volatile crypto market without the complexities of directly shorting the asset. Listed on the New York Stock Exchange, SETH marks ProShares’ pioneering venture into the world of inverse ETFs.

Ethereum
ProShares Introduce SETH, World's First Ethereum Inverse ETF 2

The launch of Ethereum ETFs began in early October, with ProShares unveiling three out of a total of nine new products. However, the initial response was lukewarm compared to the enthusiastic reception received by their Bitcoin Strategy ETF in the past. Michael Sapir, the CEO of ProShares, emphasized SETH as a solution to the challenges associated with obtaining short positions in Ether, which often involve cumbersome and costly processes. Sapir stated that SETH was specifically designed to simplify the process of acquiring short exposure to Ether, making it more accessible for investors.

ProShares Forefront In Diverse ETFs Launch

ProShares, a prominent player in the crypto-linked ETF market, has been leading the ETF revolution since 2006. The company boasts one of the most extensive ETF lineups and manages over $60 billion in assets, along with its affiliates. This recent development follows ProShares’ previous successes in the cryptocurrency market.

In June, the company introduced its first short bitcoin-linked ETF in the United States, trading under the ticker BITI. Moreover, in October 2021, ProShares made history by launching BITO, the first US bitcoin-linked ETF, amassing over $1 billion in assets within just two days of its release. Additionally, the ETF issuer pioneered the creation of the first BTC-linked mutual fund, BTCFX, in July 2021, further solidifying its position as an innovative leader in the cryptocurrency investment landscape.

Ethereum: SEC Nod Imminent for Ether Futures ETFs

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Anticipation is mounting as Ethereum Futures ETFs prepare to secure approval from U.S. securities regulators. These innovative financial contracts enable traders to speculate on the upcoming value of an exchange-traded fund [ETF] without possessing the underlying asset, in this case- ether.

In an exclusive report by Bloomberg, a series of firms are in contention for regulatory endorsement and subsequent issuance of Ethereum futures ETFs. Notable contenders include Volatility Shares, Bitwise, Roundhill, VanEck, Proshares, and Grayscale. These entities have formally submitted applications for ETFs that would center on derivatives contracts linked to ether, rather than the cryptocurrency itself.

To bring this revolution to fruition, the U.S. Securities and Exchange Commission must provide the green light—an event that Bloomberg analysts predict is on the horizon. This optimistic outlook has triggered a surge in applications from preeminent asset management firms, with the most recent entry being the Valkyrie Ethereum Strategy ETF, filed by U.S.-based AUM on August 16.

In a recent move, Volatility Shares has also thrown its hat into the Ethereum ETF arena. Pioneering a unique strategy, their proposed Ether Strategy ETF [Ticker: ETHU] is poised to invest in cash-settled Ethereum futures contracts, thereby bypassing direct involvement in the cryptocurrency itself.

Eric Balchunas, a distinguished senior ETF analyst at Bloomberg, notes that six reputable entities have officially joined the race to launch Ethereum futures exchange-traded funds. This substantial development underscores a burgeoning fascination with broadening investment horizons within the cryptocurrency domain.

Ethereum Is Up By 10%

The firms contending for regulatory approval and the subsequent rollout of Ethereum futures ETFs encompass Volatility Shares, Bitwise, Roundhill, VanEck, Proshares, and Grayscale. These enterprises have meticulously submitted formal applications for their distinct ETF propositions, aiming to acquaint investors with Ethereum futures contracts.

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Image Credit- WhaleWire

The price of Ether, surging nearly 10% from $1,551 to $1,708, responded enthusiastically to news of the United States Securities and Exchange Commission’s impending endorsement of the inaugural exchange-traded funds based on Ether Futures.

While the SEC maintains its resistance toward spot ETFs, it has demonstrated an openness to considering ether futures ETFs. Notably, U.S.-based ETFs that possess crypto derivatives—specifically, bitcoin futures ETFs—already exist. The industry keenly awaits a verdict on the potential approval of ETFs linked to Bitcoin itself, rather than derivatives, a prospect sought after by financial giants such as BlackRock.

Coinbase Expands Offering: Launches XRP and LTC Futures Contracts

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Coinbase Global has added support for XRP and LTC perpetual futures contracts, two of the largest cryptocurrencies in the market. Following the listing, the two tokens have posted minor gains against Bitcoin and other virtual currencies.

At the time of writing this article, Litecoin is exchanging hands at $92, according to Coinmarketcap, and it’s the 12th largest virtual currency in the market. Similarly, XRP is being traded at $0.69 with a market capitalization of $36 billion.

It is worth taking into consideration that these perpetual contracts are only available to institutional traders. The announcement comes close on the heels of the U.S. Securities and Exchange Commission [SEC] asking the top exchange to delist all virtual currencies with the exception of Bitcoin [BTC].

Both tokens are in the limelight for various reasons. Ripple-affiliated XRP recently notched a landmark victory against the US market watchdog when Judge Torres ruled that Ripple Labs Inc. did not violate federal securities law by selling its XRP token on public exchanges.

On the other hand, Litecoin’s third halving commenced on August 2, which is touted to alter the dynamics of the altcoin, reducing the miner block reward from 12.5 to a mere 6.25 Litecoin per transaction block. The event has also sparked an exponential surge in LTC holders, strengthening its presence in the crypto payment landscape.

Meanwhile, the platform’s futures exchange logged roughly $2 billion in volumes last month, even though momentum slowed over the course of the month.

Coinbase Futures Exchange’s Volume Soared In July

According to data from The Block, Coinbase’s “global expansion strategy” has paid off handsomely after the Bermuda-based futures exchange’s volume during the month of July surpassed about $2 billion. Notably, the offshore division’s first two contracts—bitcoin and ether perpetual futures—were introduced in May.

However, according to Coinbase International, the volume traded across the two contracts was only $1.963 billion, gradually declining throughout the month. Nevertheless, the exchange’s latest endeavor only accounts for a minuscule percentage of the overall market for crypto futures. Since the new market is still in its early stages, it might take some time for liquidity to rise and attract new users from existing exchanges, as reported by TronWeekly.

Coinbase Breaks New Ground: Offshore Volumes Hit $2B In July

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Coinbase’s “global expansion strategy” has reaped rich dividends after the Bermuda-based futures exchange reached roughly $2 billion in volumes during the month of July, data from The Block revealed. Notably, the offshore wing was launched in May with two contracts: bitcoin and ether perpetual futures.

But only $1.963 billion worth of volume was traded across the two contracts, according to Coinbase International, indicating a gradual fall throughout the month. Nevertheless, the exchange’s new venture only makes up a small portion of the larger crypto futures market. The new market is still in its infancy, and it may take some time to attract new customers from other exchanges and increase liquidity.

When compared to its closest competitors, CME Group’s ether futures contract saw volumes of $64.3 million in the first month it traded in 2021, according to information from The Block. The ether contract offered by Coinbase International witnessed monthly volumes of $770 million in July.

The exchange is set to announce its second-quarter financial results on August 3. Last quarter, the firm’s revenue plunged due to a significant drop in trading volumes amid crypto regulatory crackdowns in the US.

In contrast, its Q1 2023 financial results easily exceeded investor expectations. The U.S. crypto exchange generated net revenues of $736 million, a net loss of $79 million, and adjusted EBITDA of $284 million in the first three months of the year. Numerous publications claim that analysts had anticipated a first-quarter loss for the corporation and a much smaller $655 million in revenue.

Coinbase Key Deadlines

Following the recent issuance of a scheduling order by Judge Failla that set significant deadlines for each party, the legal dispute between Coinbase and the SEC is about to approach a crucial stage. Coinbase’s chief legal officer, Paul Grewal, highlighted their importance on Twitter.

One of them required the exchange’s legal briefs to be submitted by August 4, 2023, and supporting briefs to be presented within certain timelines, impacting the case.

Other parties with an interest will have until August 11 to submit Amicus Curiae briefs in support of Coinbase’s move for judgment on the pleadings. On or before October 3, the SEC will submit its legal brief against Coinbase, including its own defenses and supporting evidence. The exchange’s deadline for submitting a brief in response to the SEC’s filing is October 24.