Through exchange-traded funds (ETFs), traditional financial institutions are developing innovative ways to provide investors with digital assets.
Three new Exchange Traded Funds have different exposures to Bitcoin, gold, and Ethereum.
Henry Jim, a Bloomberg Intelligence ETF analyst, published research on June 27 regarding three ETF products that would give investors access to Ethereum, Gold, Bitcoin, and MicroStrategy.
ETF with Gold and Bitcoin Stacked
A new ETF offering indirect exposure to Bitcoin and gold has a prospectus that Quantify Chaos Advisors and Tidal Investments jointly filed.
The filing states that this will use investments as leverage to expose investors to both assets without buying them outright. It will invest in cash, gold futures, reverse purchase agreements, Bitcoin futures, and others associated with either gold or bitcoin.
Despite the lack of connection between both assets, the attempts to combine techniques for Bitcoin and Gold to provide complimentary gains. It aims to reduce abrupt changes in the market and offer steady investment opportunities.
According to the filing:
“The Fund uses leverage to ‘stack’ the total return of holdings in the Fund’s Bitcoin strategy together with the total returns of holdings in the Fund’s Gold strategy. Essentially, one dollar invested in the Fund provides approximately one dollar of exposure to the Fund’s Bitcoin strategy and approximately one dollar of exposure to the Fund’s Gold strategy.”
Exchange Traded Fund for MicroStrategy
In other Bitcoin-related news, well-known issuer T-Rex Group has applied to the SEC to create funds to provide investors with inverted leveraged positions to MicroStrategy and 2X Long options.
According to Eric Balchunas, senior analyst at Bloomberg, investors would be exposed to around 20 times the S&P 500’s usual volatility if the funds were approved. He said:
“These are a near-lock to be [the] most volatile ETFs ever seen in the US, [and they] will likely be in the neighborhood of 20x the volatility of SPX. The ghost pepper of ETF hot sauce.”
The biggest corporate Bitcoin holder is MicroStrategy, with 214,400 BTC, or more than 1% of the entire supply of the popular cryptocurrency. Michael Saylor, the executive chairman of the corporation, has been a strong supporter of Bitcoin and has insisted that the company will carry out its Bitcoin acquisition.
ETF with Ether Option Income Strategy
Additionally, YieldMax filed for an ETF that sells calls to generate revenue and owns spot Ethereu. By market capitalization, ETH is the second-largest digital asset, giving investors indirect exposure.
As said by Jim:
“[The ETF will] invest in spot ETFs, sells options on them for the premium. Will have a cap on upside of performance of the underlying Ether ETF.”
Furthermore, the fact that the Fund does not make direct investments in ETH or other digital assets was evident in the filing. It avoids making direct investments in derivatives that follow the performance of ETH and doesn’t aim to get direct exposure to the spot or cash price of digital assets.