Leveraged inverse Ether exchange-traded funds have emerged as the standout winners in the U.S. ETF market this year, turning Ethereum’s prolonged decline into outsized gains for bearish investors. According to the source report and comments cited from Bloomberg ETF analyst Eric Balchunas, the ProShares UltraShort Ether ETF (ETHD) has delivered a year-to-date return of roughly 247% to nearly 250%, making it the best-performing ETF in the United States so far this year. Close behind it is the T-REX 2X Inverse Ether Daily Target ETF from Rex Shares, which has returned about 220% year to date.
Ethereum’s decline created the setup
The rally in these funds has been driven by a sharp collapse in Ether itself. The report says ETH has fallen nearly 51% since January, creating an unusually favorable backdrop for products designed to profit from further downside. Rather than being hurt by the cryptocurrency’s weakness, investors holding inverse Ether ETFs benefited as the asset continued to slide.
That dynamic explains why shorting ETH has become one of the most effective ETF strategies in the U.S. market this year. In a market environment where long crypto exposure has struggled, bearish positioning through listed products has produced some of the strongest returns available to ETF investors.
How ETHD works
ETHD belongs to a category of high-risk leveraged ETFs that aim to magnify the inverse daily performance of an underlying benchmark. Specifically, the fund is structured to deliver twice the inverse of the daily move in Bloomberg’s Ethereum Index. In practical terms, when the tracked benchmark falls on a given day, ETHD is designed to rise by roughly double that percentage, before fees and tracking considerations.
This structure has made ETHD particularly powerful in a persistent downtrend. As Ether continued to weaken over the course of the year, the daily inverse leverage embedded in the fund amplified those declines into exceptional gains for ETF holders. That mechanism is exactly what pushed ETHD to the top of the U.S. ETF performance rankings.
A second inverse Ether fund also surged
The same broader trend has lifted another bearish Ethereum product into the top tier of fund performance. Rex Shares’ T-REX 2X Inverse Ether Daily Target ETF operates in a similar fashion to ETHD, but the report notes an important distinction: it takes its short exposure against spot Ether rather than Bloomberg’s Ethereum index.
Even with that structural difference, the outcome has been similar. As Ether sold off, the Rex Shares product also generated explosive returns, climbing to approximately 220% year to date. That made it the second-best performing ETF in the U.S., reinforcing the broader conclusion that inverse ETH exposure has dominated ETF leaderboards this year.
Analyst reaction underscores the scale of the move
Balchunas summarized the situation bluntly in a post on X. He wrote that the best-performing ETF this year is the -2x Ether ETF ETHD, up 247%, and that the number two product is the other -2x Ether ETF. His final remark—“Brutal”—captured the severity of Ether’s decline and the extent to which bearish products have capitalized on it.
The observation is notable because it highlights how weakness in a major crypto asset has not only punished long holders, but also reshaped ETF performance tables across the broader U.S. market. In effect, Ethereum’s downturn has become one of the clearest examples this year of how leverage and inverse exposure can rapidly transform a collapsing underlying asset into a top-performing tradable product.
High returns come with significant risk
Despite their eye-catching gains, leveraged inverse ETFs are not simple buy-and-hold vehicles. These funds are generally designed to achieve their target on a daily basis, not over long investment horizons. As a result, their performance over time can diverge from what investors might expect based on the cumulative move in the underlying asset, especially during volatile or choppy market conditions.
That risk profile matters. The same leverage that boosted returns during Ether’s sustained slide can also magnify losses if the market reverses. A sharp rebound in ETH, or even an extended period of back-and-forth price action, could significantly alter outcomes for holders of these products. While the current year has favored bearish positioning, the strategy remains highly sensitive to trend changes.
What this means for the ETF market
The rise of ETHD and the Rex Shares inverse Ether fund shows that crypto-linked ETFs are no longer just vehicles for long exposure. They are increasingly being used as tactical instruments for expressing negative views on digital assets, particularly during periods of sustained weakness. In this case, listed products tied to Ethereum’s decline have outperformed nearly every other ETF category in the U.S. market.
For now, the message from performance tables is straightforward: shorting Ether has been one of the most profitable ETF trades of the year. Whether that remains true will depend on Ethereum’s next move. But as of the figures cited in the report, bearish investors using leveraged inverse ETF structures have clearly been the biggest beneficiaries of ETH’s slump.