Hedgeye has filed for a “Hedged Bitcoin” ETF that will mix publicity to identify ETFs with an choices overlay designed to cut back volatility and handle draw back threat. Bloomberg ETF analyst James Seyffart flagged the submitting on X, calling it a brand new try and package deal BTC publicity in a extra defensive wrapper.
“WOAH — NEW: Hedgeye ‘Hedged Bitcoin’ ETF was simply filed,” Seyffart wrote. He added that, in response to the submitting, the product would “maintain spot Bitcoin ETFs and use choices methods to cut back vol and draw back threat.”
The proposed fund is known as the Hedgeye Hedged Bitcoin ETF and would commerce beneath the ticker HBIT on NYSE Arca, Inc., in response to the prospectus excerpt shared by Seyffart. The doc stays preliminary, stating that the knowledge “just isn’t full and could also be modified,” and that the securities will not be offered till the registration assertion filed with the Securities and Change Fee turns into efficient.
Bitcoin Publicity With A Danger Overlay
The core construction is simple: the fund seeks Bitcoin publicity via ETPs and ETFs, whereas utilizing choices to dampen volatility and restrict draw back. The prospectus says the fund goals “to cut back volatility and handle draw back threat via an choices technique that includes the acquisition and/or sale of put and name choices” based mostly on Hedgeye Danger Administration, LLC’s proprietary alerts.
These alerts are described as “Danger Vary” alerts, which the submitting says are used to develop market entry and exit factors for investable belongings. In follow, the ETF wouldn’t merely purchase and maintain Bitcoin-linked merchandise. It could regulate its choices positioning based mostly on market circumstances, implied volatility, Bitcoin value traits, liquidity, and different components decided by the adviser.
“The Fund will make the most of choices on shares of Reference ETPs and/or on indexes or ETPs and ETFs that present publicity to Bitcoin value actions,” the submitting states. “The Fund’s choices technique is designed to cut back volatility and handle draw back threat whereas sustaining publicity to the efficiency of Bitcoin via investments in ETPs and ETFs.”
That language places HBIT in a rising class of crypto merchandise aimed not at maximizing uncooked upside, however at altering the return profile of Bitcoin publicity. For allocators, the related pitch just isn’t merely entry to BTC, which is already out there via spot ETFs, however a rules-based overlay supposed to make that publicity extra tolerable throughout drawdowns.
Draw back Safety, However With A Commerce-Off
The submitting is express that the hedge comes with a price. The fund’s choice positions are “designed to supply draw back safety,” however might also imply “ceaselessly foregoing some upside potential.” That’s the central trade-off within the technique: traders might get a smoother trip in adversarial markets, however they could additionally hand over a part of Bitcoin’s upside throughout robust advances.
“The premiums acquired from writing choices are supposed to supply earnings to offset the price of shopping for choices,” the submitting says. The fund might purchase and write each standardized exchange-traded choices and Versatile Change Choices, or FLEX Choices, that are exchange-listed contracts with customizable phrases equivalent to strike value and expiration date.
The prospectus additionally notes that each standardized exchange-traded choices and FLEX Choices are assured for settlement by the Choices Clearing Company. FLEX Choices differ from typical listed contracts as a result of traders can customise sure key phrases which can be usually standardized.
At press time, BTC traded at $62,719.
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