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 are – no, required – Bitcoin traders to double down on long or short positions.
This is what we’re talking about:
With these two new ETFs now offered, traders can get 200% exposure in either direction.
So if Seb went out and bought $100 worth of long shares, and then BTC rose 10%, his return would be $20 instead of $10.
BUT, if Seb bought the same ‘long’ position BTC ETF, and BTC went down at 10% he would lose $20 instead of $10.
(Double exposure = double the risk, double the reward – or lose).
Here’s the interesting part of all this:
REX Shares and Tuttle Capital Management do not purchase BTC directly to offer it. Instead, they buy derivatives other spot BTC ETFs to provide their clients with double or inverse exposure.
And they charge a nice 0.95% in management fees that they receive regardless of the results.
So if an investor was really bullish or really interested in BTC, why wouldn’t they just buy derivatives on one of the existing spot BTC ETFs if they wanted the extra exposure?
Well, pretty much the same reason BTC ETFs exist in the first place. While you could be go out and create a wallet > transfer fiat to crypto > buy BTC; many traders are more used to just buying stocks with their fiat – it’s easier for them.
The same goes for these ETFs with 2x exposure. The companies they manage will do the hard work, and investors can simply invest as if it were any other stock.
We didn’t expect to see much innovation in ETFs, but Pandora’s Box is now open.
(And that’s exciting!)
