Domain Daily: Betting Against Bitcoin

The Dose

  • Inverse Bitcoin ETF

  • Splitting a Cab

  • Kellogg's Splits Up

Want to Bet Against Bitcoin?

On Tuesday, the first inverse Bitcoin ETF began trading on the New York Stock Exchange.

The Point: The ETF is managed by ProShares, the asset manager that was also the first to list a Bitcoin futures ETF. It is somewhat surprising to see an inverse ETF listed before a spot fund that lets consumers invest more directly into Bitcoin. The futures fund that is currently on the market, as the name implies, doesn't actually own Bitcoin. Instead, it gains its exposure to the asset via derivative contracts. This inverse ETF will do the same, except in reverse. That said, the timing is a bit suspect. Bitcoin has obviously had a rough go of it lately. An inverse ETF would have done well during this latest bout of volatility. The risk is that consumers will jump into the new product after Bitcoin has tumbled.

Bitcoin Guide

Uber Brings Back Shared Rides

The company suspended the feature in March 2020 due to the pandemic. However, it's now reinstating it in select cities.

The Point: Uber's decision is another small sign that we're returning to normal. And it couldn't have come at a better time. Sharing rides is an easy way to cut down on the cost of transportation. As the price of Ubers has risen with inflation, this decision will provide a little bit of relief to travelers. Choosing to take a ride share will reduce the cost of a ride by 20% (assuming you get matched with a fellow traveler), and Uber promises that the option will only add a maximum of eight minutes to your travel time.

Why We Invested in Uber

Kellogg's Is Breaking Up Its Businesses

The 116-year-old cereal maker is undergoing a major transformation. It's breaking itself up into three separate companies: a cereal business, another for snack foods, and one for plant-based foods.

The Point: Why would a company split itself up? There are a few reasons. Sometimes the operating units are so different from each other that it's just easier for them to be independent. That's not the case here. Kellogg's seems to be doing this for another reason: market valuation. Its snackfood unit accounts for 60% of its revenue. And, like the cereal business, that's a pretty reliable income stream. People generally don't cut back on the staples. But the plant-based food market (think meat substitutes) is a high-risk, high-growth play. By breaking these units into individual pieces, investors can better value the cash flows and manage their own risks.

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*The content team responsible for the above content uses primary and secondary sources they believe to be accurate, which includes but is not limited to Bloomberg, The Wall Street Journal, Financial Times, and CNBC, among others. 

*Domain Money Advisors, LLC, an investment adviser registered with the U.S. Securities and Exchange Commission and an affiliate of Domain Money, has (as of this writing) the following assets mentioned in this communication as part of its managed portfolios: BTC, UBER