Investing in Bitcoin with a Leverage Fund
Investing in cryptocurrency has become increasingly popular, and with it, the number of crypto-focused investment funds has also grown. However, there is a new approach to investing in Bitcoin that stands out from the rest. This approach allows investors to leverage their investments without requiring extensive knowledge or effort.
The Introduction of the 2x Bitcoin Strategy ETF
Volatility Shares recently announced the launch of a new Exchange Traded Fund (ETF) called the 2x Bitcoin Strategy ETF, with the ticker BITX. This ETF is the first of its kind on a US exchange, offering integrated leverage for investors. While some brokers may offer leverage as well, it is not accessible or suitable for everyone due to the required knowledge and risks involved.
The underlying asset of the BITX ETF is bitcoin futures. A typical futures ETF aims to mirror the price of bitcoin, but the BITX ETF doubles the volatility. As a result, investors have the potential to earn twice the profit on the price of bitcoin, but they also face the risk of losing twice as much.
The BITX ETF started trading on the NYSE Arca exchange last Tuesday. On its first day, it recorded a trading volume of approximately $5.5 million. This places it in the 30th position out of 195 ETFs launched in 2023. While the trading volume for BITX is considered above average, it falls short compared to the popular bitcoin ETF BITO, which surpassed $1 billion in trading volume at its launch.
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Volatility Shares, the issuer of the BITX ETF, already has another ETF with built-in leverage called UVIX. In addition, the company offers three other stock funds that focus on the VIX, also known as the fear index.
The Resurgence of Bitcoin ETFs
ETFs, especially those related to cryptocurrencies, are currently a hot topic. The interest in this investment vehicle intensified when BlackRock applied for a spot bitcoin ETF. A spot ETF is considered the ultimate goal for crypto investment funds, but the US has yet to authorize such a fund.
Shortly after the BlackRock news, investors flocked to purchase shares in Grayscale’s GBTC fund. Grayscale has long been attempting to transform this fund into a spot ETF, and the announcement reignited hope for its approval.
In conclusion, the introduction of the 2x Bitcoin Strategy ETF offers investors a unique opportunity to leverage their investments in bitcoin. While this approach can potentially double profits, it also amplifies the risks involved. As Bitcoin ETFs continue to gain popularity, particularly with the ongoing pursuit of spot ETFs, the landscape of cryptocurrency investment is rapidly evolving.