Hedgeye has filed for a “Hedged Bitcoin” ETF that might 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 line with 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 called the Hedgeye Hedged Bitcoin ETF and would commerce underneath the ticker HBIT on NYSE Arca, Inc., in line with the prospectus excerpt shared by Seyffart. The doc stays preliminary, stating that the data “isn’t full and could also be modified,” and that the securities will not be bought till the registration assertion filed with the Securities and Change Fee turns into efficient.
Bitcoin Publicity With A Threat Overlay
The core construction is simple: the fund seeks Bitcoin publicity by means of 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 by means of an choices technique that includes the acquisition and/or sale of put and name choices” based mostly on Hedgeye Threat Administration, LLC’s proprietary alerts.
These alerts are described as “Threat 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 might regulate its choices positioning based mostly on market circumstances, implied volatility, Bitcoin worth traits, liquidity, and different elements 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 worth 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 by means of 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 isn’t merely entry to BTC, which is already out there by means of spot ETFs, however a rules-based overlay meant to make that publicity extra tolerable throughout drawdowns.
Draw back Safety, However With A Commerce-Off
The submitting is specific that the hedge comes with a price. The fund’s possibility positions are “designed to offer draw back safety,” however might also imply “often foregoing some upside potential.” That’s the central trade-off within the technique: traders might get a smoother trip in hostile markets, however they might additionally surrender a part of Bitcoin’s upside throughout robust advances.
“The premiums obtained from writing choices are meant to offer revenue 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 comparable to strike worth 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 are usually standardized.
At press time, BTC traded at $62,719.
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