The world of cryptocurrency investing has taken a significant leap forward with the introduction of two innovative exchange-traded funds (ETFs) by Horizons ETFs Management (Canada) Inc. The BetaPro Bitcoin ETF (HBIT) and the BetaPro Inverse Bitcoin ETF (BITI) mark a pivotal moment in digital asset accessibility, offering investors both long and short exposure to Bitcoin futures through a regulated, exchange-listed vehicle.
Trading began on April 15, 2021, on the Toronto Stock Exchange under ticker symbols HBIT (Cdn$ Shares), HBIT.U (US$ Shares), BITI (Cdn$ Shares), and BITI.U (US$ Shares). This launch positions Canada as a leader in crypto-asset innovation—particularly with BITI becoming the first inverse Bitcoin futures ETF globally, enabling bearish market strategies without the complexity of margin accounts or direct short selling.
Understanding HBIT and BITI: Core Mechanics
As part of Horizons ETFs’ BetaPro suite, these ETFs utilize futures contracts and derivatives to deliver leveraged, inverse, or directional exposure to asset classes. Unlike traditional ETFs that hold physical assets, HBIT and BITI track the Horizons Bitcoin Front Month Rolling Futures Index (Excess Return)—a benchmark designed to replicate returns from long notional positions in Bitcoin futures.
HBIT: Long Exposure Made Simple
HBIT aims to mirror the daily performance of the index before fees and transaction costs. It's ideal for investors who believe in Bitcoin’s upward trajectory but prefer the simplicity and security of a regulated brokerage account over managing private keys or crypto wallets.
BITI: The World’s First Inverse Bitcoin Futures ETF
BITI is engineered to deliver up to -100% (inverse) of the index’s daily return. Crucially, this objective applies only on a daily basis—meaning compounding effects can cause deviations over longer periods. At launch, BITI’s negative exposure was set at 1x, though the manager retains discretion to adjust it based on market conditions.
This flexibility allows Horizons ETFs to respond dynamically to volatility, ensuring efficient risk management. Updates on current exposure levels are published on HorizonsETFs.com, promoting transparency for active traders.
Why These ETFs Matter for Investors
Bitcoin has long been associated with high volatility and technical complexity. While spot trading requires secure storage solutions and deep technical knowledge, these ETFs lower the barrier to entry significantly.
Steve Hawkins, President and CEO of Horizons ETFs, emphasized:
“Buying HBIT and BITI is as easy as buying any stock or other ETF through a broker, and doesn’t require investors to open up separate cryptocurrency accounts.”
For conservative or risk-averse investors, BITI offers a regulated way to hedge against Bitcoin downturns—without needing a margin account or navigating futures exchanges directly.
The Role of Futures and Market Making
These ETFs rely on CME Bitcoin (USD) Futures contracts traded on the CME Futures Exchange—a U.S.-registered Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO). The underlying index uses settlement prices from these futures, calculated at 4:00 p.m. EST using data from the CME CF Bitcoin Reference Rate (BRR), which aggregates spot trading activity across major platforms between 3:00 p.m. and 4:00 p.m. GMT.
Market makers play a crucial role in maintaining liquidity. They create and redeem ETF shares using Bitcoin futures for hedging, ensuring tight bid-ask spreads and smooth price tracking—regardless of whether the ETF holds actual digital coins.
Key Features at a Glance
- Ticker Symbols: HBIT / HBIT.U (long), BITI / BITI.U (inverse)
- Management Fees: 1.00% for HBIT; 1.45% for BITI (plus applicable taxes)
- Index Provider: Solactive AG
- Underlying Asset: CME-listed Bitcoin futures
- Trading Venue: Toronto Stock Exchange (TSX)
Risks and Considerations
While accessible, these products are not suitable for all investors. Both HBIT and BITI are speculative tools subject to high volatility due to their reliance on futures pricing, which can diverge from spot Bitcoin prices.
Moreover:
- Daily rebalancing means long-term returns may not align with cumulative index performance.
- Inverse ETFs like BITI decay over time in sideways or rising markets.
- Hedging costs and management fees further impact net returns.
Investors must read the full prospectus and monitor holdings frequently—ideally on a daily basis—to ensure alignment with their overall strategy.
Frequently Asked Questions (FAQ)
Q: What is the difference between HBIT and BITI?
A: HBIT provides long exposure to Bitcoin futures, rising when prices increase. BITI delivers inverse exposure, gaining value when Bitcoin futures decline.
Q: Can I use these ETFs for long-term investing?
A: These are designed primarily for short-term tactical use due to daily reset mechanics. Holding them long-term may result in performance drift from expected returns.
Q: Do I need a crypto wallet to invest in HBIT or BITI?
A: No. These are traditional ETFs traded via brokerage accounts—no blockchain interaction or digital wallets required.
Q: How does the inverse exposure work in BITI?
A: BITI seeks to deliver up to -100% of the index’s daily return. For example, if the index drops 5%, BITI aims to rise ~5% before fees.
Q: Are these ETFs backed by real Bitcoin?
A: No. They’re based on regulated Bitcoin futures contracts traded on the CME, not physical cryptocurrency.
Q: Where can I find updates on BITI’s current leverage ratio?
A: The Manager publishes real-time exposure adjustments on HorizonsETFs.com.
Final Thoughts
Horizons ETFs’ launch of HBIT and BITI represents a major milestone in financial innovation. By combining regulatory compliance with sophisticated investment mechanics, they offer retail and institutional investors alike powerful tools for expressing bullish or bearish views on Bitcoin within familiar brokerage environments.
Whether used for hedging, speculation, or portfolio diversification, these ETFs expand the frontier of crypto-accessible investing—ushering in a new era of strategic flexibility.