TL;DR
Full Story
Who knew the world needed this?
Yesterday, investment managers REX Shares and Tuttle Capital Management launched two new exchange-traded funds (ETFs) that allowed – no, required – Bitcoin traders to double down on long or short positions.
Here’s what we’re on about:
With these two new ETFs that are now being offered, traders can get 200% worth of exposure either direction.
So if Seb went out and bought $100 worth of ‘long’ shares, and then BTC went up by 10%, his return would be $20 rather than $10.
BUT, if Seb purchased the same ‘long’ position BTC ETF, and BTC went down by 10%, he would lose $20 rather than $10.
(Double exposure = Double the risk, double the reward – or loss).
Here’s the interesting part to all of this:
REX Shares and Tuttle Capital Management aren’t buying BTC directly in order to be able to offer these. Instead, they’re buying derivatives on other spot BTC ETFs to deliver the 2x leveraged or inverse exposure for their customers.
And they’re charging a tidy 0.95% in management fees which they receive regardless of the results.
So, if an investor was really bullish or really bearing on BTC, why wouldn’t they just buy derivatives on any of the existing spot BTC ETFs if they wanted the additional exposure?
Well, pretty much the same reason why BTC ETFs exist in the first place. While you could go out and set up a wallet > transfer fiat to crypto > buy BTC; many traders are more used to just buying shares with their fiat – it’s easier for them.
Same goes with these 2x exposure ETFs. The companies who manage them will do the hard work, and investors can just invest as if they’re any other share.
We didn’t expect to see a ton of innovation on the ETF side of things but Pandora’s Box is now open.
(And that’s exciting!)
