Grayscale Investments Announces New Bitcoin ETFs
Major cryptocurrency asset manager Grayscale Investments announced two new Bitcoin outcome-oriented exchange-traded funds (ETFs). According to an April 2 announcement, the new products are the Grayscale Bitcoin Covered Call ETF (BTCC) and the Grayscale Bitcoin Premium Income ETF (BPI). According to an email sent to Cointelegraph, the two new Bitcoin (BTC) funds are meant to generate revenue by harnessing BTC volatility: “Both strategies may be considered as an alternative income stream that’s less correlated to traditional income-oriented investments.”
A Complex Derivative Product
The Bitcoin Covered Call product seeks to capture the highest premiums and maximize potential income. Grayscale suggests that it may serve as a complement to Bitcoin exposure.
The fund’s strategy involves systematically writing calls very close to spot prices. The hope is that, due to Bitcoin’s historically high volatility, it would generate income through paid call generation. On the other hand, the Bitcoin Premium Income product seeks to balance upside participation with a degree of income generation. This is meant to act as an alternative to direct Bitcoin ownership and seeks a balance between growth and income generation.
This fund systematically writes calls targeting strike prices well out-of-the-money on Bitcoin ETFs, including Grayscale Bitcoin Trust (GBTC) and Grayscale Bitcoin Mini Trust (BTC). The announcement reads: “By focusing on this type of call writing strategy, BPI allows investors to participate in much of Bitcoin’s upside potential while possibly benefiting from some dividend income.”
Grayscale Investments promises that both the new products will allow for a differentiated source of revenue that “delivers an uncorrelated source of income for investors.” Furthermore, the new derivatives will feature monthly distributions and systematic options management.
Just the Latest Grayscale Filing
Earlier this week, Grayscale also filed to list an exchange-traded fund (ETF) holding a diverse basket of spot cryptocurrencies. This new product includes Bitcoin, Ether (ETH), XRP, Solana (SOL) and Cardano (ADA).
In late March, the US stock exchange Nasdaq also filed to the US Securities and Exchange Commission (SEC) seeking permission to list Grayscale Investments’ spot Avalanche ETF. Grayscale’s website lists 28 crypto products, of which 25 are single-asset derivatives, and three are diversified.
Grayscale is also among the asset managers currently waiting for the approval of its XRP spot ETF, as well as other products. Among those products, we can find the spot Cardano ETF filing and its Litecoin Trust conversion to an ETF.