Ethereum: Can the new Inverse ETF lure in more ETH bears

ProShares has unveiled an Ethereum ETF designed to facilitate short positions on ETH price, offering investors the means to hedge against potential price declines without direct exposure to the cryptocurrency.

• Pro Shares announced bearish Ethereum ETF.
• The price of ETH remains relatively stable; however, the chances of liquidation grew.

The cryptocurrency community is generally optimistic about ETF approvals. ProShares has now introduced a unique ETF focused on Ethereum [ETH], which allows investors to bet against its price.

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Something for the bears

The ProShares Short Ether Strategy ETF aims to provide returns that are inversely correlated to the Standard & Poor’s CME Ether Futures Index.

In simple terms, if the index goes down by 1%, this ETF will try to gain 1%. Unlike direct investments in cryptocurrencies, this product is linked to futures contracts on Ethereum.

In contrast, spot Bitcoin ETFs are still pending approval by the U.S. Securities and Exchange Commission.

The initial response to Ethereum ETFs in early October wasn’t as successful as Bitcoin ETFs.

ProShares introduced three Ethereum-focused ETFs, and the largest among them has less than $10 million in assets.

ProShares CEO Michael Sapir explained that this new inverse ETF allowed investors to take a bearish stance on Ethereum without the challenges and expenses associated with direct short positions.

On the positive side, it may attract more investors to the market, potentially increasing ether’s liquidity. Additionally, it provides a way for investors to manage risk, making them more inclined to invest in ether.

Conversely, the launch of such an ETF may lead to greater price volatility as these bearish funds can cause rapid declines in ETH’s value.

It could also impact the overall market sentiment. It has the potential to make some investors more bearish about the future of Ethereum.

Furthermore, there’s also the possibility that some investors might excessively short ether. This can lead to significant price fluctuations.

What will traders do?

At press time, the ETH Liquidation Heatmap pointed to a risk zone for Ethereum between $1700 and $1800. ETH’s price sat at $1793, which is quite close to this risky range. This means caution is needed when dealing with ETH in this price range.

Realistic or not, here’s ETH’s market cap in BTC terms

Many traders could face liquidation if prices go against them, creating a potential wave of selling.

Traders should watch prices closely, use stop-loss orders, or other protective measures. This range is crucial for ETH, and price swings can be volatile.