Traditional financial institutions are looking for new ways to provide investors with access to digital assets through exchange-traded funds (ETFs).
On June 27, Bloomberg Intelligence ETF analyst Henry Jim reported on three ETF products that provide investors with access to Bitcoin, Gold, Ethereum, and Micro Strategies.
Stacked Bitcoin and Gold ETFs
Tidal Investments and Quantify Chaos Advisors have jointly filed a prospectus for a new ETF that provides indirect exposure to bitcoin and gold.
According to filingThis ETF uses leveraged investing to expose investors to two assets without having to buy them directly. Invests in Bitcoin futures, gold futures, cash, reverse purchase contracts, and other Bitcoin or gold-related ETFs.
The ETF aims to combine Bitcoin and Gold strategies to provide complementary benefits despite the lack of correlation between these assets. It aims to minimize short-term market volatility and provide a stable investment opportunity.
The application states:
“The fund uses leverage to ‘stack’ the total return of the assets held in the fund’s Bitcoin strategy with the total return of the assets held in the fund’s Gold strategy. Essentially, each dollar invested in the fund provides approximately $1 of exposure to the fund’s Bitcoin strategy and approximately $1 of exposure to the fund’s Gold strategy.”
MicroStrategy ETF
In other Bitcoin-related ETF news, prominent ETF issuer T-Rex Group has filed with the SEC to provide investors with funding to trade 2X Long and Inverse Leveraged positions with MicroStrategy.
Eric Balchunas, senior ETF analyst at Bloomberg, noted that if the fund is approved, investors would be exposed to about 20 times the typical volatility of the S&P 500. He said:
“These are very likely to be the most volatile ETFs you’ll see in the US, with a volatility approaching 20x that of the SPX. Ghost peppers in ETF hot sauce.”
MicroStrategy is the largest corporate holder of Bitcoin, accumulating 214,400 BTC, equivalent to more than 1% of the total supply of the top crypto asset. The company’s chairman, Michael Saylor, is a huge supporter of BTC and has claimed that the company will continue to acquire BTC.
Ethereum Options Income Strategy ETF
YieldMax also filed for an ETF that would hold a spot Ethereum ETF and sell calls for a profit. This provides investors with indirect exposure to ETH, the second largest digital asset by market capitalization.
According to Jim:
“(The ETF) invests in a spot ETH ETF and sells options at a premium. There are limits to the performance upside of the underlying Ether ETF.”
Meanwhile, the filing also clarifies that the fund does not invest directly in ETH or any other digital asset. We avoid investing directly in derivatives that track ETH performance and do not seek direct exposure to spot or cash prices of digital assets.