In a striking turn of events, betting against Ethereum (Ether) has emerged as the most lucrative exchange-traded fund (ETF) strategy in 2025, according to Bloomberg analyst Eric Balchunas. Two ETFs, ProShares UltraShort Ether ETF (ETHD) and T-Rex 2X Inverse Ether Daily Target ETF (ETQ), have secured the top spots in Bloomberg Intelligence’s ranking of the year’s best-performing funds. These ETFs have achieved remarkable year-to-date returns of approximately 247% and 219%, respectively, by leveraging short positions against Ether with twice the volatility of the cryptocurrency itself.
The success of these ETFs underscores the challenging year Ether has faced, with its price plummeting about 54% year-to-date as of April 11. Balchunas described the implications for Ether as “brutal,” highlighting the significant impact of these inverse ETFs on investor sentiment. Both ETHD and ETQ utilize financial derivatives to inversely track Ether’s performance, though they do not directly short the cryptocurrency. Instead, they employ futures contracts to capitalize on price declines, a strategy favored by sophisticated traders seeking to exploit market volatility.
The performance of these ETFs reflects the broader market sentiment, which has been bearish on Ether due to factors such as Ethereum’s reduced fee revenues following the Dencun upgrade and challenges in monetizing its layer-2 scaling chains. Despite their impressive year-to-date gains, these leveraged ETFs carry significant risks, including volatility decay and potential losses if market trends reverse quickly. As such, they are best suited for knowledgeable investors who actively monitor their portfolios.
