ETFs closely linked to the price of bitcoin serve investors quite well as a crypto proxy during a volatile week, even as losses for long-term holders continue to build. The ProShares Bitcoin Strategy ETF (BITO) and the Short Bitcoin Strategy ETF (BITI) both saw their largest daily trading volume on record last week. Smaller funds from Valkyrie and VanEck also saw a surge in volume. All four funds saw a bigger move than the 21% drop in bitcoin spot during the week. “This is a proof point for the benefit of exposure through futures, but it also shows the strong demand from investors on both sides,” bullish and bearish, said Simeon Hyman, global investment strategist at ProShares, about his performance. company funds. Applications for bitcoin spot ETFs have been consistently rejected by the SEC, but the agency has allowed bitcoin futures ETFs to launch. The futures are traded on the CME exchange, giving regulators more convenience. Bitcoin futures don’t perfectly track bitcoin points and ETFs can bring additional costs to investors, such as the potential for rolling costs when funds swap out expired futures for new ones. The ProShares short bitcoin futures ETF is also a daily inverse fund, meaning that performance may differ if held over a long period of time. However, bitcoin futures are also financially defined, meaning that no bitcoin changes hands or is held in an account. This reduces the risk that real bitcoins can be lost by the owner or misused by partners, as happened with the FTX crypto exchange. “There are major benefits to gaining exposure to bitcoin through futures … compared to the challenges that can be found using exchanges, which are not mature enough,” Hyman said. He added that the cost of playing for bitcoin futures has dropped significantly since the ETF was launched. The dramatic decline for the crypto raises long-term questions about the board, which has sold off sharply from its peak late last year. The long-term fund ProShares is down about 75% since its debut in October 2021. There is a possibility that there is no possibility of new price action, plus the collapse of FTX – and Terra in May, undermined confidence in the sector. , driving away users and destroying liquidity for all aspects of crypto, including bitcoin futures. “Bitcoin bear market started almost a year ago and mostly institutions sold assets; we think that retail investors are still holding positions (on average with losses). … From market participation data in recent years, bitcoin breakeven level and trading psychology , we think that retail investors can start to sell if BTC trades below $10k,” Morgan Stanley head of cryptocurrency research Sheena Shah said in a note to clients on Friday. But Hyman said he doesn’t think the dramatic drop in crypto prices and the FTX implosion “is the end of anything” and that the industry will continue to mature over time. “We had to look a little bit past this week, and for those looking, we think we made a solution that did the job this week,” Hyman said. – CNBC’s Michael Bloom contributed to this report.