Asset Management Firms Propose Bitcoin ETFs With Derivatives

According to BlockBeats, on December 2, four asset management companies have submitted applications to U.S. regulators to create Bitcoin exchange-traded funds (ETFs) that utilize derivatives to minimize or entirely prevent potential losses. This move comes as Bitcoin has experienced a significant surge this year, prompting interest from investors who may have previously hesitated due to the cryptocurrency's volatility. Todd Rosenbluth, Head of Research at consulting firm TMX VettaFi, noted that many investors might regret missing out on Bitcoin's rapid rise due to concerns over its volatility. The introduction of these downside protection ETFs is expected to allow more individuals to incorporate Bitcoin exposure into their portfolios in a risk-conscious manner. Specifically, Calamos Investments has applied for four managed floor ETFs. First Trust Portfolios has submitted applications for a 15% floor ETF and a buffer ETF designed to protect against the first 30% of any losses. Innovator ETFs is seeking approval for a 10% buffer product that will operate over a three-month period. Additionally, Innovator ETFs has applied for a 20% three-month managed floor ETF with a set 'participation rate.' Furthermore, Grayscale Investments plans to launch a covered call Bitcoin ETF, which will involve selling call options on a spot Bitcoin ETF. While this strategy may reduce potential gains from price increases in Bitcoin, it is designed to provide regular premium income.