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Bitcoin ETFs were a hit with investors in 2024, and now asset management companies are starting to develop ways to combine cryptocurrencies and derivatives into exchange-traded packages.
New products will be launched this month. Asset manager Calamos announced on Monday that it will launch a Structured Protection ETF which aims to give investors a way to capture some of the upside of bitcoin with 100% downside protection.
The fund will combine exposure to options on the Cboe Bitcoin US ETF index with Treasury holdings and is designed to be held for 12 months. The exact upside limit will be determined on January 22, based on the options price. It will trade under the symbol CBOJ.
Basically, the fund is bringing a popular stock ETF strategy to cryptocurrency investing. Defined outcome products, including reserve fundshave boomed in recent years as investors look for new ways to diversify their portfolios. Its rise in popularity was apparently aided by the 2022 market sell-off, when both stocks and bonds fell.
Bitcoin spot funds launched in January 2024 and arguably had the best debut in ETF history. The funds combined to raise tens of billions of dollars and helped propel bitcoin’s race to a record above $100,000.
Bitcoin has rebounded sharply since ETFs tracking the cryptocurrency were approved last January.
Cryptocurrency inflows and rally boosted iShares Bitcoin Trust ETF (IBIT)the most popular of the funds, with more than $50 billion in total assets.
However, Matt Kaufman, head of ETFs at Calamos, said his team believes financial advisors are still largely avoiding bitcoin due to its history of volatility, and that these structured funds can win them over.
“People looking to get into that space, they want to do it in a risk management framework, or something that makes a little more sense for their portfolio,” Kaufman said. He also believes investors will hold the Calamos fund alongside bitcoin-only ETFs.
Calamos isn’t the only ETF manager working on how to combine cryptocurrency exposure with other popular fund styles.
Innovative and First trust They are two other ETF issuers that have come forward to launch funds with strategies similar to those of Calamos. Companies are also trying to combine bitcoin with income-generating strategies, including covered purchase funds proposed by issuers such as gray scale and round hill.
More funds are likely to come forward throughout 2025, especially before a Securities and Exchange Commission that is expected to be more crypto-friendly under the president-elect. donald trump.
The Calamos fund is designed to be held for a period of 12 months. The holding period indicated is January 22, 2025 to January 31, 2026. Because exposure to bitcoin is built through options, the price of which changes as their expiration date approaches, it is possible that Investors who sell the fund early may realize less than the expected gain from a bitcoin rally and could even suffer a loss.
Heart | Holding Period | Downside Protection Target | Annual fee |
---|---|---|---|
BOXWOOD | 01/22/2025-01/31/2026 | 100% | 0.69% |
Fountain: White hair
Calamos also plans to launch “floor” funds that offer 90% and 80% protection for bitcoin, allowing for some initial losses in exchange for more upside.
Kaufman said the structure of working bitcoin products will likely look different than traditional reserve funds, which protect against the stated percentage loss in the first place due to the volatility of cryptocurrencies.
“If you look at the S&P 500 returns, it looks like a normal bell curve distribution. If you look at the distribution of Bitcoin returns, it looks a lot more like a smile. It’s all left-tail or far-right risk at the So if you build a buffer, you’re not really protecting against much of anything,” Kaufman said.
Another thing to keep in mind is how the options market grows along with the funds. Options linked to bitcoin ETFs began rolling out in late 2024. Options liquidity issues have hurt the performance of leveraged funds linked to MicroStrategywhich is often considered a substitute for bitcoin.
“We don’t have any concerns about capacity,” Kaufman said of the options market for the Calamos funds.