Traditional financial institutions are exploring new avenues to provide investors with access to digital assets through exchange-traded funds (ETFs).
On June 27, Henry Jim, an ETF Analyst at Bloomberg Intelligence, highlighted three ETF products that would give investors exposure to Bitcoin, Gold, Ethereum, and MicroStrategy.
Tidal Investments and Quantify Chaos Advisors have collaborated to file a prospectus for a new ETF that offers indirect exposure to Bitcoin and Gold. This ETF will utilize investments to provide investors with exposure to both assets without directly purchasing them. It will invest in Bitcoin futures, gold futures, cash, reverse purchase agreements, and other Bitcoin or Gold-related ETFs.
The aim of this ETF is to combine Bitcoin and Gold strategies to offer complementary benefits despite the lack of correlation between these assets. The fund seeks to reduce short-term market fluctuations and offer stable investment opportunities. The filing explained that the fund uses leverage to stack the total return of holdings in the Bitcoin strategy with the total returns of holdings in the Gold strategy.
In a separate development related to Bitcoin ETFs, T-Rex Group, a well-known ETF issuer, has applied to the SEC for funds that would provide investors with leverage on MicroStrategy. If approved, these funds would expose investors to approximately 20 times the typical volatility of the S&P 500. Bloomberg’s senior ETF analyst, Eric Balchunas, described these potential ETFs as likely to be the most volatile in the US market, comparable to 20 times the volatility of the S&P 500.
MicroStrategy currently holds the largest amount of Bitcoin among corporations, owning 214,400 BTC, which is more than 1% of the total supply of the leading cryptocurrency. The company’s executive chairman, Michael Saylor, is a vocal advocate for Bitcoin and has committed to continuing the firm’s Bitcoin acquisitions.
YieldMax has also filed for an ETF that involves holding spot Ethereum ETFs and selling calls for income, providing investors with indirect exposure to ETH, the second-largest digital asset by market capitalization. This ETF will invest in spot ETH ETFs and sell options on them for a premium, with a cap on the upside performance of the underlying Ether ETF.
The filing clarified that the fund does not directly invest in ETH or other digital assets, avoiding direct investment in derivatives tracking ETH performance and refraining from seeking direct exposure to the spot or cash price of digital assets.
