SBIT: Catching Bitcoin's Downside Risk May Be Limited For 2026

Summary The ProShares Ultrashort Bitcoin ETF (SBIT) offers -2x daily inverse exposure to bitcoin, with strong liquidity and a 0.95% expense ratio. SBIT is suitable only for daily tactical trades; holding longer exposes investors to compounding risk, NAV erosion, and significant losses. Recent bitcoin volatility and institutionalization may limit trading opportunities for 2026 if bitcoin price performance remains relatively flat. I assign SBIT a Hold rating, emphasizing its utility for daily trading but warning against long-term speculation due to inherent structural risks. The ProShares Ultrashort Bitcoin ETF ( SBIT ) is an inverse leveraged exchange-traded fund designed to provide -2x the daily performance of bitcoin. The strategy exhibits significant liquidity with over $104mm in share value changing hands on a daily basis, making SBIT an appealing investment vehicle for gaining amplified inverse exposure to bitcoin. Given that this is a leveraged fund, SBIT should only be utilized for daily exposure as a long-term position may present significant risks to investors, including value decay, price volatility, adverse performance, and unsalvageable losses. About ProShares Ultrashort Bitcoin ETF SBIT was launched by ProShares on April 1, 2024 on the NYSE Arca Exchange. The strategy has a net expense ratio of 95bps, making this a cost-effective leveraged strategy for those seeking to gain inverse leveraged exposure to bitcoin. An investment in SBIT is similar to taking a short position in bitcoin, providing investors with upside potential when the price of bitcoin declines. Seeking Alpha SBIT utilizes swap derivatives in order to gain exposure to -2x the daily performance of bitcoin. Swaps are derivatives that provide performance exposure to SBIT in exchange for a fixed rate. Swaps are settled at the end of each trading day, exchanging performance for the fixed rate and are reset the following trading day. This will be reflected in the performance of SBIT in which the performance of the ETF will be measured on a daily basis. As a result of this phenomenon, SBIT’s performance beyond a single trading day may result in a compounding effect beyond the indicated -2x daily performance target to both the upside and downside. Investors should be aware that the long-term performance of SBIT will not be reflective of the long-term performance of bitcoin. For example, the 1-year returns of bitcoin was -3.76% whereas SBIT declined by -34.11%. TradingView On the other hand, bitcoin declined by roughly -21% in the last 3 months with SBIT returning roughly 40%. TradingView Despite bitcoin’s decline in the last year, different holding periods may return widely differentiated returns. This is largely due to the path of the underlying asset throughout the holding period in which long stretches of bitcoin price appreciation may compound to the downside for SBIT, resulting in deeper losses despite bitcoin’s inevitable decline. For this reason, SBIT should not be utilized for long-term speculation as medium-term pricing trends may significantly impact the inevitable returns of SBIT. This is also due to how performance is calculated with respect to the underlying asset; rather than rolling returns, SBIT will experience a daily reset that can impact overall performance despite the inevitable price decline of bitcoin. Factors that may influence the price of SBIT include pricing volatility, trading momentum, and NAV erosion. Investors should consider these factors prior to making an investment decision, particularly if the intention is to hold SBIT for longer than a single trading day. In terms of my outlook, I’m expecting bitcoin to remain relatively price-constrained below $100k/bitcoin. My rationale behind this comes in two parts: Leveraged positions wiped out in October 2025. Institutionalization of bitcoin. In October 2025 , the price volatility of bitcoin led to $19b in leveraged strategies being wiped out. Though I don’t expect this to deteriorate the bitcoin trading market, particularly when considering that the coin market capitalization sits at roughly $1.8T, I expect investors to take more precaution when evaluating risky trading strategies. My second point is that bitcoin has largely become an institutional asset following the emergence of bitcoin spot ETFs in January 2024. Though bitcoin spot ETFs account for roughly 6.61% of the total market capitalization for bitcoin, this percentage of the market can be impactful to the pricing of the underlying asset, particularly given that bitcoin is oftentimes traded on momentum. The use of bitcoin spot ETFs as part of an investment portfolio subjects bitcoin to standard advisory operations, including rebalances and cash raises, which may influence the perceived direction of the coin. Coinglass Though I’m not expecting any major movements to the downside for bitcoin at this point in time, traders may opportunistically trade momentum to both the upside and downside, using leveraged and inverse leveraged ETFs like the ProShares Ultra Bitcoin ETF ( BITU ) and SBIT. For a tactical strategy, traders can use a variety of tools in an attempt to predict market direction, such as time squeeze, RSI, and EMA, amongst other technical indicators. Time squeeze could be an appealing tool as it presents the directional trading volumes and the directional shift. TradingView Additional Risks Related to SBIT Investors should be mindful of the risks associated with trading SBIT; the misuse of a leveraged or inverse leveraged ETF may result in adverse performance and substantial losses. SBIT is meant to be traded within a single trading day; holding SBIT for longer than a single trading day may expose investors to NAV erosion, compounded performance, and significant losses. Bitcoin has traditionally exhibited significant volatility, which may be amplified when using SBIT. Inverse leveraged strategies tend to gravitate towards $0/share over the long run as a result of long-term asset price appreciation expectations. Given the risky nature of SBIT, I recommend traders adhere to strict risk management practices with set trading parameters prior to initiating a trade. TradingView Investors should consider the total cost of trading when calculating total returns. Trading SBIT may expose investors to higher short-term capital gains, brokerage fees, and spread risk on top of the expense ratio. You can review additional risks here and the SEC bulletin here . Final Thoughts Given its significant trading volumes, SBIT can be an appealing trading vehicle for traders seeking to amplify their exposure to the inverse of bitcoin pricing. SBIT should only be utilized for daily exposure as holding the ETF may expose investors to significant risk that may result in unrecoverable losses. Given the risks involved in holding leveraged strategies, I am recommending SBIT with a Hold rating.