Traditional financial institutions are now exploring innovative ways to offer investors access to digital assets via exchange-traded funds (ETFs).
Stacked Bitcoin and Gold ETF
On June 27, Henry Jim, an ETF Analyst with Bloomberg Intelligence, highlighted three new ETF products. These products provide investors with exposure to Bitcoin, Gold, Ethereum, and MicroStrategy.
Introduction of Stacked Bitcoin and Gold ETF
Tidal Investments and Quantify Chaos Advisors have collectively filed a prospectus for a new ETF. This ETF offers indirect exposure to both Bitcoin and Gold. The fund blends Bitcoin and Gold strategies, offering complementary benefits. This is despite the lack of correlation between these assets. By investing in Bitcoin futures, gold futures, cash, reverse purchase agreements, and other Bitcoin or Gold-related ETFs, the fund aims to minimize short-term market fluctuations. As a result, it offers stable investment opportunities.
ETF Strategy and Benefits
According to the filing, the ETF leverages investments to expose investors to both assets without directly purchasing them. The fund aims to ‘stack’ the total return of holdings in its Bitcoin strategy alongside the returns of holdings in its Gold strategy. Essentially, each dollar invested in the fund offers approximately one dollar of exposure to both Bitcoin and Gold strategies.
MicroStrategy ETF
Application for MicroStrategy ETF
In other Bitcoin-related ETF news, T-Rex Group, a notable ETF issuer, has applied to the SEC for funds that will provide investors with 2X Long and inverted leveraged positions to MicroStrategy. If approved, these funds will expose investors to about 20 times the typical volatility of the S&P 500. This will make them some of the most volatile ETFs ever seen in the US.
Insights on MicroStrategy ETF
Eric Balchunas, Bloomberg’s senior ETF analyst, commented that these ETFs would likely become the most volatile ever witnessed. He compared them to the “ghost pepper of ETF hot sauce.” MicroStrategy is the largest corporate holder of Bitcoin with 214,400 BTC. The company is led by Michael Saylor, a vocal BTC advocate. He is committed to continuing the firm’s BTC acquisition.
Ether Option Income Strategy ETF
Introduction of Ether Option Income Strategy ETF
YieldMax has also filed for an ETF that holds spot Ethereum ETFs and sells calls for income. This new ETF offers investors indirect exposure to Ethereum (ETH), the second-largest digital asset by market cap. The fund invests in spot ETH ETFs and sells options on them for premium income. This caps the upside performance of the underlying Ether ETF.
Clarification on Investment Strategy
The filing clarified that the fund does not invest directly in ETH or other digital assets. It avoids direct investment in derivatives that track ETH performance. Moreover, it does not seek direct exposure to the spot or cash price of digital assets.
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