Triple-Leverage Crypto ETFs Seek Approval in the US

Cboe BZX Exchange has submitted an application to the U.S. Securities and Exchange Commission (SEC) to list triple-leveraged daily ETFs, including products tracking Bitcoin and Ethereum. This marks the first time crypto assets are included in such high-leverage products that span traditional commodities.

The proposed funds will aim for three times the 'daily' performance of the underlying assets, not three times their year-long or monthly returns. For example, if Bitcoin rises 2% in a trading day, the fund's target is approximately a 6% increase.

However, daily resets and compounding paths can lead to significant deviations from the cumulative threefold rise or fall of the underlying asset. This is known as 'volatility decay', which can quietly erode net value over time.

The application also highlights the importance of understanding the risks involved with these products, particularly for ordinary investors who may overlook the daily rebalancing and holding logic.