Stop piling into leveraged Bitcoin ETFs — Consider this instead
Leveraged Bitcoin ETFs are popular, but they often massively underperform the alternatives for crypto futures trading.
Investors are dumping hundreds of millions of dollars into exchange-traded funds (ETFs) that tout 2x leveraged exposure to Bitcoin’s (BTC) price volatility. They are setting themselves up for disappointment. Traders looking for a risk-on BTC bet should stay away from these funds and try out crypto futures exchanges instead.
The past week saw upwards of $100 million flow into leveraged BTC ETFs after a sharp BTC selloff sparked hopes of a similarly dramatic price rebound. Total assets in these funds now exceed $1.4 billion, and more are joining the fray. On July 10, Rex Shares launched two new ETFs designed to deliver 200% exposure to BTC’s price volatility.
Leveraged BTC ETFs appeal to those seeking as much upside from BTC’s volatility as possible with minimal upfront investment. These funds don’t actually hold BTC. Instead, they use derivatives to double down on BTC price exposure. In theory, a 2x leveraged BTC position should return $2 for every $1 gain in BTC’s spot price.
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Author: Alex O’Donnell
