DCAP ETF Brings Fixed-Income Style Exposure to Bitcoin Treasuries

A new exchange-traded fund (ETF) has launched on the Cboe BZX Exchange, offering investors a unique way to tap into the world of Bitcoin without directly owning the cryptocurrency. The T-Strive Digital Credit Preferred Income ETF, trading under the ticker DCAP, focuses on collecting dividend payments from companies that hold significant amounts of Bitcoin on their balance sheets.

The fund splits its initial portfolio roughly 50/50 between two preferred securities: STRC, issued by Strategy Inc., and SATA, issued by Strive Inc. Both instruments are tied to companies with substantial Bitcoin holdings, but the ETF's investors gain exposure through fixed-income-style instruments rather than the volatile price swings of the underlying asset.

At launch, SATA offers an annualized yield of around 13% with daily dividend payments, while STRC provides returns in the 12-13.16% range, paid out on a semi-monthly basis. The ETF's portfolio is actively managed by Tuttle Capital Management, with Strive Asset Management serving as sub-adviser.

Preferred securities from companies that hold or derive income from at least 5% in Bitcoin or Bitcoin-linked instruments make up at least 80% of the fund's net assets. These securities rank above common equity in the capital structure, providing holders with a higher claim on company assets and profits if things go sideways.

However, investors should be aware that these preferred securities are ultimately backed by companies whose balance sheets are heavily exposed to Bitcoin's price. A sustained downturn could put pressure on their ability to maintain dividend payments, highlighting the risks involved in this investment strategy.