U.S. asset management firms have developed plans to launch Bitcoin ETFs based on derivatives to assist cautious investors in mitigating risks associated with cryptocurrency price swings.
Derivatives-based Bitcoin ETFs
U.S. asset managers have filed plans with regulators to launch Bitcoin ETFs that use derivatives. These products aim to reduce potential losses and attract investors seeking exposure to the crypto market with reduced risks.
Key Players and Strategies
Calamos Investments, First Trust Portfolios, Innovator ETFs, and Grayscale Investments are among the firms seeking approval from the U.S. Securities and Exchange Commission. Each firm plans to offer products using buffered and managed floor strategies to protect against losses up to 30%, while some also propose covered call ETFs or leveraged variations.
Risks and Prospects
The filings follow significant shifts in the ETF market as Ethereum spot ETFs recently recorded a large single-day inflow, surpassing Bitcoin. The new products could launch as early as February if approved, though position limits on options contracts could pose challenges for the funds, particularly if demand exceeds current capacity.
The development of derivatives-based Bitcoin ETFs highlights the efforts to attract a broader range of investors by offering risk-minimized strategies amid the cryptocurrency's high volatility.
