Overview
A new bitcoin-focused exchange-traded fund (ETF) from the global investment management firm Calamos was introduced on Wednesday, promising complete protection against the volatility of bitcoin prices.
Key Features
- Downside Protection: The ETF offers 100% downside risk protection through a mix of bitcoin-linked options and Treasury bonds.
- Investment Growth Potential: It aims to provide a return of 10% to 11.5% upside within a year, as stated in a press release.
Additional Funds
The other two funds, named CBXJ and CBTJ, are set to launch on February 4, offering 90% and 80% downside protection, respectively. Both will come with capped upsides ranging from 28% to 30% and 50% to 55%.
Investment Strategy
Investors placing $100 into the ETF can expect a portion allocated to Treasury bonds that would guarantee the value of their investment remains at $100, irrespective of fluctuations in bitcoin’s price.
Cost Considerations
However, this security comes with a management fee of 0.69%, higher than the average 0.51% for U.S.-based ETFs. This higher cost may be justified by investors looking for stability amid market volatility.
Market Context
While many in the crypto community advocate for bitcoin’s long-term value, traditional institutional investors express concern about its price volatility.
Competition and Future Outlook
Questions remain regarding whether the ETF will compete with MicroStrategy’s convertible bonds, which also offer downside protections. However, experts clarify that due to differing structures, these products do not directly compete. ETFs are gaining traction as a solution for investors wary of unpredictable market conditions, especially with changes anticipated under new SEC regulations.
