Valkyrie unveils leveraged bitcoin ETF

Feb 26th, 2024 | By | Category: Alternatives / Multi-Asset

Valkyrie Funds has introduced a new crypto-related ETF in the US providing leveraged exposure to bitcoin.

Leah Wald, CEO at Valkyrie Funds

Leah Wald, CEO at Valkyrie.

The Valkyrie Bitcoin Futures Leveraged Strategy ETF (BTFX US), which is listed on Nasdaq, provides twice the daily performance of the S&P CME Bitcoin Futures Index.

The index tracks the value of cash-settled, front-month bitcoin futures linked to the CME CF Bitcoin Reference Rate, an aggregate of bitcoin prices across multiple eligible cryptocurrency exchanges.

The index’s underlying bitcoin futures contracts transition to the next month’s contract through an equal distribution over the final five trading days of the current contract’s life.

The ETF comes with an expense ratio of 1.85%, matching the cost of the $350 million Volatility Shares 2x Bitcoin Strategy ETF (BITX US) which debuted last year on Cboe BZX Exchange as the first US-listed leveraged bitcoin ETF.

Bitcoin recently breached the $50,000 threshold for the first time since November 2021, marking a significant bull run with an increase of over 211% since the start of 2023.

This surge in the world’s leading cryptocurrency has been fuelled by the excitement over the launch of the first spot bitcoin ETFs in the United States, alongside other positive factors such as the weakening US dollar, a decrease in inflation rates, the Federal Reserve pausing interest rate increases, and a renewed interest in digital assets following past crypto industry scandals.

Leveraged bitcoin ETFs enable sophisticated investors to amplify returns from potential further increases in the price of bitcoin. Similar to all leveraged ETFs, these funds do come with significant risks, however, which is why they are generally not suitable for a retail audience. Specifically, they are not appropriate as buy-and-hold investments as they tend to decay in value if held for an extended period, potentially leading to large losses, especially in volatile but range-bound markets.

The crypto industry is increasingly integrating into the mainstream financial landscape. The US market has already expanded to include inverse bitcoin ETFs as well as several ETFs that offer traditional, unleveraged exposure to bitcoin, either by holding bitcoin directly or investing in bitcoin futures.

Commenting on the new listing, Leah Wald, CEO of Valkyrie, said: “The launch of BTFX represents our commitment to bringing investors innovative options for accessing bitcoin and the digital asset ecosystem as a whole. With Bitcoin so much in the focus right now, traders and investors are looking at how they can use financial instruments to tap into this space, and as a leader in digital-asset-focused ETFs, we wanted to be sure we provide them with a great fund.”

Steven McClurg, CIO of Valkyrie, added: “BTFX is designed for those who see beyond the horizon of traditional investments, offering a strategic tool to capitalize on the volatility and growth prospects of bitcoin. It also showcases our commitment to delivering tailored digital asset products, providing our clients with the means to engage with the crypto market through a regulated, familiar format. It’s an exciting step for Valkyrie in our mission to bridge the gap between conventional financial markets and the burgeoning world of digital assets.”

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