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Those betting against Grayscale Investments’s Bitcoin Trust, or GBTC, have seen a nearly 50% return from the start of June to mid-July, the second-best showing for any exchange-traded fund over that stretch, according to Ihor Dusaniwsky, head of predictive analytics at S3 Partners. The average short interest on the trust is $87 million. Its rank on a list of most profitable US ETF shorts clocks in behind only a leveraged semiconductor product. (GBTC technically isn’t an ETF but has been lumped into the list as a point of comparison, and because many treat it as if it were one, said Dusaniwsky.)

“It was a solid short play,” he said in an interview. “Bitcoin went down a ton and the price of the security went down.” 

Short sellers have had crypto-centric stocks and funds in their sights amid a historic drawdown for the sector. Digital assets are having a terrible year as the Federal Reserve and other central banks raise interest rates in their fight against inflation, creating a damaging environment for risky assets. Bitcoin is down roughly 50% this year, with some other cryptocurrencies seeing even greater declines. 

Another crypto fund, the ProShares Bitcoin Strategy ETF (BITO), has returned more than 40% for short sellers since the beginning of June, with more than $216 million shorted, according to S3. It follows GBTC on S3’s list of most profitable ETF shorts.

Meanwhile, the ProShares Short Bitcoin Strategy ETF (BITI), which tracks the inverse performance of Bitcoin futures, has accumulated roughly $69 million in assets since launching in mid-June despite stumbling 17%. 

GBTC has been in the spotlight recently after Grayscale tried to convert the trust into an ETF, a move that was quashed by the US Securities and Exchange Commission. Flipping GBTC into an ETF would have solved a persistent issue for Grayscale: the trust’s deep discount to its underlying holdings. Unlike an ETF, GBTC shares can’t be created and redeemed to keep pace with shifting demand. That’s effectively turned GBTC into a closed-end fund, with GBTC’s price trading 29% below its net-asset value.