After three days of listing, the trading volume was sluggish, and the first leveraged BTC ETF in the United States got off to a bad start

Produced | Odaily Planet Daily

Author | Odaily Qin Xiaofeng

** The first leveraged cryptocurrency ETF in the United States has been listed for three days and has not performed as expected. **

On Tuesday, June 27th, US ETF issuer Volatility Shares Shares Shares is a social investing app that helps people build wealth through a community of peers and seasoned investors. Shares is now available on the App Store and Google Play in the UK, Poland and Belgium. View more issued "2x Bitcoin Bitcoin is the first successful Internet currency based on peer-to-peer technology; that is, no central bank or authority is involved in the transaction and production of Bitcoin currency. It was created by an anonymous individual named Satoshi Nakamoto/ Created by the group. The source code is publicly available as an open source project, and anyone can view it and participate in the development process. Bitcoin is designed to create only 21 million BTC. Bitcoin uses the SHA-256 hash algorithm, and the average transaction confirmation time It takes 10 minutes. View more "Strategy ETF" (2x leveraged bitcoin strategy ETF) officially landed on CBOE's BZX exchange and started trading.

According to the monitoring of Odaily Planet Daily, 110,000 shares were issued on the first day of launch, with an issue price of US$15, a net asset value of US$1.65 million, and a trading volume of US$5.5 million on the first day, which is the best first-day trading volume of encrypted ETFs issued this year. (Odaily Note: CSOP BTC Futures ETF’s trading volume on the first day was only US$830,000, Samsung’s Bitcoin ETF was only US$98,000).

However, in the following two trading days, the trading volume of Volatility's leveraged Bitcoin ETF began to plummet, with a single day of less than 300,000 US dollars-yesterday (29th) 21,768 shares were traded, with a transaction volume of 234,000 US dollars; its ETF issuance volume Gradually, the current outstanding shares are 370,000, and the NAV has grown to $5.7 million, as follows:

What is a Leveraged Bitcoin ETF? According to the application documents submitted by Volatility Shares to the SEC, the investment results sought by the ETF issued this time are equivalent to twice the single-day excess return of the S&P CME Bitcoin Futures Daily Rollover Index (referred to as the "Rollover Index"). For example, if the rollover index rises by 1% a day, the net value of the ETF needs to rise by 2%, and if the rollover index falls by 1%, the net value of the ETF needs to fall by 2%.

The "Roll Index" is used to measure the performance of the CME Bitcoin futures market, rebalancing daily between the current month's futures contract and the next month's futures contract. It doesn’t matter if you don’t understand, you just need to know that CME’s Bitcoin Futures Daily Rollover Index is actually basically the same as the CME Bitcoin Futures Index in terms of data and trends—both are affected by Bitcoin spot price trends. As follows:

Therefore, the leveraged ETF issued this time is actually the same as the benchmark index of the previously issued Bitcoin futures ETF, which is all futures data.

In order to achieve the 2x return target, the ETF will take 25% of the fund's total assets to set up a wholly-owned subsidiary to invest in CME Bitcoin futures (become long); the remaining assets will be directly invested in cash, cash-like instruments or High-quality securities, including U.S. government securities, money market funds, corporate debt securities, etc., these assets will be used to provide liquidity or as margin in the future.

Official website information shows that the leveraged ETF currently holds CME Bitcoin futures due on July 23 worth $10.708 million, CME Bitcoin futures due on August 23 worth $626,000, and cash equivalents worth $5.69 million. From the perspective of proportion, the total futures position is exactly twice the net value of the fund, which can meet the risk requirement of double leverage exposure.

However, the author still believes that the scale of the leveraged ETF market will not grow very much this time.

First of all, the distribution node is not good, and the homogeneous products have no bright spots. The 2x leveraged ETF is essentially a futures ETF, and the US market has issued ProShare, VanEck VanEck View More, Valkyrie Valkyrie is a professional alternative asset management platform that provides a wide range of investment services and products as early as the past two yearsView More And Hashdex Hashdex connects the world of digital assets and traditional markets, unleashing the potential of blockchain for mainstream investors. View more and many other Bitcoin futures ETFs, CME has also launched Bitcoin futures long ago. As a latecomer, Volatility Shares seems a bit tasteless and does not have much first-mover advantage. This can be seen from the trading volume of these two days. As can be seen.

Furthermore, management fees are an important factor that directly affects investors' choices. The management fees of Volatility Shares are relatively high among all ETFs. According to statistics from Odaily Planet Daily, CSOP’s bitcoin futures ETF currently has the highest management fee in the ETF market, reaching 2%, while the management fee of ETFs launched in the United States and Canada in the past two years is generally around 1%, and the management fee of Volatility Shares is as high as 1.85% True Not attractive.

Finally, the failure cases of leveraged ETFs have also sounded the alarm for Volatility Shares. As early as April 16, 2021, the world's first cryptocurrency leveraged ETF - Beta Beta BETA tokens correspond to the X-axis values of LED pixels on space art displays and live streamed from satellites as part of the Geometric-1 Earth orbit mission and part of DOGE-1, a lunar mission to be placed in LEO in October 2022. These pixel hue (KAPPA), brightness (GAMMA), X-axis (BETA) and Y-axis (RHO) positions are fetched in exchange for the above tokens along with time (XI). View More Pro Bitcoin ETF (Symbol: HBIT) is listed on the Toronto Stock Exchange. After its launch, the ETF market performance was sluggish. In the past year, the average daily trading volume was only 5,769 shares (with a transaction volume of 100,000 US dollars), and the total asset size was only 3.76 million US dollars; in mid-April this year, the issuer Horizons finally shut down the ETF .

Of course, there are limitations in the Canadian financial market itself, but it also proves that leveraged ETFs do not have high development potential, especially compared to the two spot ETFs launched in Canada during the same period——Purpose Purpose is designed to be based on ERC-20 A token on top of the token standard that allows people to contribute to its altruistic goals by holding it. Its main feature is its ability to generate a second token called DUBI (Decentralized Universal Basic Income), which is backed by a large community of activists as well as an independent team of volunteer developers working together to increase The value of DUBI, its distribution to the world population for the eventual gradual realization. Allocation will be facilitated on-chain through a quota contract that awards each individual DUBI at a rate that can be set equal to 1 to 100 purposes of DUBI output, the process also incorporates optional automatic taxation to ensure government compliance regulation. See more BTC spot ETF ($85.13 million) and 3iQ 3iQ See more BTC spot ETF ($77.95 million), which is enough to prove that cryptocurrency spot ETFs are more attractive to investors, which is why BlackRock, Fidelity , ARK Investment and other traditional investment institutions get together to apply for Bitcoin spot ETF.