Leverage Shares is set to introduce a groundbreaking range of 3x leveraged Exchange-Traded Funds (ETFs) focusing on Bitcoin and Ethereum for European clients. This launch is scheduled for next week, despite recent downturns in the crypto market, which have seen significant drops in both leading cryptocurrencies.
According to Bloomberg ETF analyst Eric Balchunas, the new offerings will include both 3x long and -3x short leveraged funds for Bitcoin and Ethereum, marking a significant expansion of Leverage Shares’ portfolio of leveraged investment products. The launch will take place on the SIX Exchange in Switzerland, providing a new avenue for investors to capitalize on the fluctuations in cryptocurrency prices. Currently, Leverage Shares offers a variety of leveraged products targeting stocks such as Apple, Tesla, Facebook, and Amazon.
This initiative is not without precedent; in October, Defiance Investments had submitted a proposal to the US Securities and Exchange Commission for a similar suite of leveraged crypto ETFs that aimed to provide 3x leverage and inverse exposure to various digital assets, including Bitcoin, Ethereum, and Solana, as well as crypto-centric and tech stocks.
The timing of this launch is particularly interesting, given the current state of the crypto market. Bitcoin and Ethereum have experienced significant declines, plummeting 21% and 26% respectively in November alone. At present, Bitcoin is trading around $84,000, while Ethereum has dipped to approximately $2,700, as the market grapples with strong bearish pressures.
While the introduction of leveraged crypto ETFs could offer new trading strategies for adept investors, they also come with inherent risks associated with the volatile nature of cryptocurrency assets. Critics worry that the high leverage could lead to immediate liquidations, especially during periods of acute market turbulence.
Balchunas remarked that the “timing is either really good or really bad depending on your point of view,” highlighting the dual-edged sword nature of investing in leveraged funds amid a weakening market. As the launch approaches, market participants will closely watch how these new products perform and whether they will attract investor interest despite the current downturn in crypto valuations.
