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Why new financial products like the short bitcoin ETF are usually bearish

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Yahoo Finance's Jared Blikre talks with JC Parets, Founder & Chief Strategist at allstarcharts.com about the launch of ProShares Short Bitcoin Strategy (BITI) and why new financial products -- much like financial magazine covers -- can be contrary indicators.

Video transcript

JARED BLIKRE: And there's an interesting way to short Bitcoin now. The first Bitcoin ETF, ticker BITI, launched about a week ago. And a lot of people said, well, OK, that should be the bottom, but maybe history is saying something different.

JC PARETS: Yeah, we look at these ETF providers like magazine cover indicators, right?

JARED BLIKRE: Right.

JC PARETS: The journalists traditionally do an awesome job at aggregating consumer sentiment and investor sentiment, right? They're really good at that to the point where they create a magazine cover. So if you're interested in, like-- my whole point is, by the time the journalists finally come to this conclusion, which takes time, and then they take it to the art designers and get everything approved, it's like a process. So by the time you actually get that on the cover, it's usually pretty late in the cycle, right? That's how it is. The journalists are great at that. That's their job, right?

The ETF companies is very similar. They aggregate sort of consumer and investor sentiment, see what investors want. Like, what is it that they want? What vehicle do they want? By the time you get everything approved and da da da, it's usually late in the cycle for very similar reasons. So it's sort of like two different parties telling a similar story of how consumers and investors are thinking at any given time. And it's probably not a coincidence that every time one of these futures are launched or something like that, they tend to come at peaks when there is euphoria. And that's what people want. And now when there is extremes and pessimism, what are you getting? You're getting a vehicle to now short it. Where was this a year ago? [LAUGHS]

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