Bitwise Files for 3 New Crypto Option Income ETFs
- Bitwise seeks to launch Bitcoin, BITQ and Ethereum option income strategies.
- The new funds will use a synthetic covered call approach to generate income while limiting upside.
- BITQ would track a crypto innovators ETF that gained 52% in the past month.
Bitwise Asset Management filed with the Securities and Exchange Commission to launch three new option income exchange-traded funds targeting cryptocurrency exposure, according to a recent filing. The proposed funds would use synthetic covered call strategies to generate income while providing limited exposure to digital asset price movements.
The three funds include the Bitwise Bitcoin Option Income Strategy ETF, the Bitwise BITQ Option Income Strategy ETF and the Bitwise Ethereum Option Income Strategy ETF. Each fund aims to generate monthly income while offering exposure to crypto price movements, but they won't hold any digital currencies directly.
The strategy works by using options contracts to create exposure to crypto prices while selling additional options to generate income payments, according to the filing. This approach caps potential gains at predetermined levels, typically set 0% to 15% above current market prices but allows investors to collect premiums along the way.
The new fund launches come as crypto markets show mixed signals, with Bitcoin trading near record highs and institutional interest in crypto products growing. The income approach offers investors a way to earn premiums from crypto volatility while limiting participation in extreme price swings that the asset class has recently experienced.
Bitwise Builds on BITQ Performance
The BITQ-focused fund would track the Bitwise Crypto Industry Innovators ETF (BITQ), which has posted strong recent performance, including gains of 52.1% over the past month and 7.4% year to date, according to FactSet data. The crypto innovators fund has attracted $18.6 million in net inflows this year and currently manages $202.8 million in assets.
BITQ's portfolio is weighted toward cryptocurrency companies, with Strategy (MSTR) representing 11.4% of its holdings and Coinbase Global, Inc. (COIN) at 10.3%, according to FactSet. The fund also holds positions in Bitcoin miners MARA Holdings, Inc. (MARA) at 8% and Core Scientific Inc. (CORZ) at 5.1%, the filing shows.
Bitcoin currently trades around $109,780, about 2% below its all-time high of $111,970 reached on May 22, according to CoinMarketCap. Ethereum has gained about 7% over the past week and trades near $2,661.
The funds will invest most of their assets in options contracts while holding cash and short-term U.S. Treasury securities as backup, the filing states. Bitwise Investment Manager serves as the proposed investment adviser for all three funds, with four portfolio managers listed in the filing. The funds would trade on NYSE Arca upon approval and launch.
