Hedgeye has filed for a “Hedged Bitcoin” ETF that will mix publicity to identify ETFs with an choices overlay designed to cut back volatility and handle draw back threat. Bloomberg ETF analyst James Seyffart flagged the submitting on X, calling it a brand new try to package deal BTC publicity in a extra defensive wrapper.
“WOAH — NEW: Hedgeye ‘Hedged Bitcoin’ ETF was simply filed,” Seyffart wrote. He added that, based on the submitting, the product would “maintain spot Bitcoin ETFs and use choices methods to cut back vol and draw back threat.”
The proposed fund is called the Hedgeye Hedged Bitcoin ETF and would commerce below the ticker HBIT on NYSE Arca, Inc., based on the prospectus excerpt shared by Seyffart. The doc stays preliminary, stating that the knowledge “isn’t full and could also be modified,” and that the securities might not be offered till the registration assertion filed with the Securities and Alternate Fee turns into efficient.
Bitcoin Publicity With A Threat Overlay
The core construction is simple: the fund seeks Bitcoin publicity by ETPs and ETFs, whereas utilizing choices to dampen volatility and restrict draw back. The prospectus says the fund goals “to cut back volatility and handle draw back threat by an choices technique that entails the acquisition and/or sale of put and name choices” based mostly on Hedgeye Threat Administration, LLC’s proprietary alerts.
These alerts are described as “Threat Vary” alerts, which the submitting says are used to develop market entry and exit factors for investable property. In follow, the ETF wouldn’t merely purchase and maintain Bitcoin-linked merchandise. It might alter its choices positioning based mostly on market situations, implied volatility, Bitcoin worth tendencies, liquidity, and different components decided by the adviser.
“The Fund will make the most of choices on shares of Reference ETPs and/or on indexes or ETPs and ETFs that present publicity to Bitcoin worth actions,” the submitting states. “The Fund’s choices technique is designed to cut back volatility and handle draw back threat whereas sustaining publicity to the efficiency of Bitcoin by investments in ETPs and ETFs.”
That language places HBIT in a rising class of crypto merchandise aimed not at maximizing uncooked upside, however at altering the return profile of Bitcoin publicity. For allocators, the related pitch isn’t merely entry to BTC, which is already out there by spot ETFs, however a rules-based overlay meant to make that publicity extra tolerable throughout drawdowns.
Draw back Safety, However With A Commerce-Off
The submitting is specific that the hedge comes with a price. The fund’s possibility positions are “designed to supply draw back safety,” however can also imply “steadily foregoing some upside potential.” That’s the central trade-off within the technique: buyers could get a smoother experience in hostile markets, however they might additionally quit a part of Bitcoin’s upside throughout robust advances.
“The premiums obtained from writing choices are meant to supply earnings to offset the price of shopping for choices,” the submitting says. The fund could purchase and write each standardized exchange-traded choices and Versatile Alternate Choices, or FLEX Choices, that are exchange-listed contracts with customizable phrases akin to strike worth and expiration date.
The prospectus additionally notes that each standardized exchange-traded choices and FLEX Choices are assured for settlement by the Choices Clearing Company. FLEX Choices differ from typical listed contracts as a result of buyers can customise sure key phrases which can be usually standardized.
At press time, BTC traded at $62,719.
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