How do inverse ETFs work in the context of digital currencies?

1 answers

• May 05, 2022 · 3 years ago
  Inverse ETFs, such as those offered by BYDFi, work by using financial instruments to achieve inverse returns to the underlying digital currency or digital currency index. These ETFs are designed to provide investors with a way to profit from the decline in the value of digital currencies. For example, if the price of a specific digital currency or a digital currency index decreases by 5%, an inverse ETF may aim to generate a return of 5% in the opposite direction. This can be useful for investors who want to hedge their exposure to digital currencies or speculate on their decline. However, it's important to carefully consider the risks associated with inverse ETFs, such as tracking errors and market volatility.
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