SEC Approves Bitcoin and Ethereum 3x Leveraged ETFs for Trading
The U.S. Securities and Exchange Commission (SEC) has approved six leveraged funds, including Bitcoin and Ethereum ETFs, for trading on the Cboe exchange. The decision, announced on October 2, allows for the listing of these 3x leveraged funds, which aim to deliver triple the daily performance of their underlying benchmarks before fees and expenses.
However, trading cannot begin immediately as the issuer, Volatility Shares, must first obtain effective registration statements. No specific launch date has been announced. The approved funds cover various assets, including Bitcoin, Ether, gold, silver, crude oil, and natural gas.
The Bitcoin and Ethereum ETFs will use futures contracts rather than holding the cryptocurrencies directly. This means their performance will be tied to futures benchmarks rather than the spot prices of BTC or ETH. For instance, a 2% daily rise in the Bitcoin futures benchmark would target a 6% gain in the fund, while a 2% decline would target a 6% loss.
Investors should note that the daily leverage resets can lead to returns that differ significantly from a simple 3x result over longer holding periods. Volatility and daily rebalancing can impact overall returns, making these products more suited for short-term trading strategies.