On Friday, 23 June 2023, Volatility Share’s Bitcoin Strategy ETF became the first leveraged ETF for Bitcoin. In a leverage Bitcoin ETF, investors will have to put only half the amount of Bitcoin to gain the same profit level.
This news comes after Blackrock, Invesco, and Valkyrie filed their spot Bitcoin ETFs; there has been a renewed interest in Bitcoin trading.
The first Bitcoin ETF was the PROSHARES BITCOIN STRATEGY ETF(BITO) on the New York Stock Exchange. It was launched on October 19, 2021.
About Volatility Share’s Bitcoin Futures ETF
The ETF will provide 2x leverage to its investors, meaning they will gain double profits with their invested funds. Also, there is an equal risk of doubling the losses as they happen.
This Leveraged ETF will track the CME Bitcoin Futures and will have the ticker symbol of BITX. These will start trading on Tue, June 27, 2023.
The SEC has a track record of not allowing Bitcoin spot ETFs, but several Bitcoin Futures ETFs are already trading in the market.
What are Leveraged Bitcoin Futures ETFs?
Bitcoin Futures are contracts between parties who have opposite view of Bitcoin’s price, and the winner gains at the expense of the loser. When the winner gains the same amount as the price gained by Bitcoin, it is called a Bitcoin Futures ETF.
However, sometimes leverage trading is used. If suppose a leverage of 2x is present, the winner gains 2 times the money of Bitcoin’s gain from the loser of the trade.
This is what the 2x Leveraged Bitcoin Futures ETF is all about. It will reap double the benefits and also risks losing double the money.
Who will Invest in a Leveraged ETF?
Unlike leveraged trading, where all kinds of people come to trade. ETFs employ distinguished traders and managers who have years of experience. This sometimes helps reduce losses and manage risks, unlike individual traders who mostly neglect risk management strategies.