Global X ETF Puts Training Wheels on Bitcoin

In the wake of last week’s bitcoin halving, which is expected to be a major catalyst for the cryptocurrency’s price, reluctant investors and financial advisors might be feeling more pressure than ever to jump on the crypto bandwagon. 

That's the investor market Global X ETFs is going after with a new bitcoin ETF—the group of people who aren’t really sure they’re ready to invest in bitcoin.

Launched March 21 as an alternative to the spot bitcoin exchange-traded funds that have had record inflows since debuting in early January, the Global X Bitcoin Strategy ETF (BTRN) is like bitcoin investing with training wheels, although that’s not part of the company's marketing materials.

The strategy adjusts exposure to bitcoin futures and short-term Treasury bonds through the Global X 1-3 Month T-Bill ETF (CLIP) based on the current bitcoin price and the near-term outlook.

The ETF, which was developed in partnership with CoinDesk Indices, is rebalanced monthly and can swing from 100% bitcoin futures to 100% short-term T-Bills. The ETF is currently neutral at 50% exposure to each asset class, according to Adam Sze, Global X head of product development.

“The ETF allows investors to maintain exposure while providing a means to navigate various market cycles,” Sze said.

Global X Offers Bitcoin for Beginners

BTRN is the Global X answer to a crypto ETF after the $47 billion issuer pulled it application for a spot bitcoin ETF in late January after it realized it would just be one more ETF in a crowded field of 11, dominated by heavyweights BlackRock and Fidelity.

“I’m still shocked Global X didn’t move forward with launching a spot bitcoin ETF,” said Nate Geraci, president of The ETF Store in Overland Park, Kans.

“That looks like an unforced error as nearly every spot bitcoin ETF has accumulated meaningful assets,” he added. “While the fee revenue from these products is meager, this was an easy opportunity for Global X to further position as an innovative issuer and attract investors to their other ETF offerings.”

BTRN, which is not cheap at 95 basis points, has attracted less than $3 million over its first month. Time will tell if there’s a market for a strategy that is designed to mute the volatility of an asset that has only known extreme volatility.

Global X, which made its mark with thematic strategies and has a reputation for innovation, has a different take on its move away from the spot bitcoin ETF herd.

“With the SEC putting all ETF issuers on the same clock, we realized it wouldn’t be possible for Global X to be a first mover or winner take all,” Sze said. “And the spot bitcoin ETFs are really buy-and-hold type products which is not part of the Global X DNA.”

But Global X, which closed 19 ETFs this year that failed to gain traction, remains committed to carving out niches, according to chief executive Ryan O’Connor.

“The things we’re doing and the things we’re looking at are things that we believe are not as easily commoditized and are differentiated from a plain vanilla product,” he said. “That spot bitcoin filing was pulled but we came out and launched a trend version of the product.”