Four asset management companies have submitted applications to U.S. regulators to create an ETF that invests in Bitcoin, but uses derivatives to minimize or completely prevent potential losses.
Todd Rosenbluth, head of research at consulting firm TMX VettaFi, said: 'Given the rapid rise of Bitcoin this year, many investors may regret missing the opportunity as they fear the volatility of cryptocurrencies. These upcoming downside protection ETFs will allow more people to add Bitcoin exposure to their portfolios in a risk-aware manner.'
Specifically, Calamos Investments has applied for four managed floor ETFs.
First Trust Portfolios has applied for a 15% floor ETF and a buffer ETF designed to guard against any losses in the first 30%.
Innovator ETFs is applying for a 10% buffer product that will operate within three months. On the other hand, it has also applied for a 20% three-month managed floor ETF, setting a 'participation rate'.
In addition, Grayscale Investments plans to launch a covered call Bitcoin ETF, which will sell call options on the spot Bitcoin ETF. If Bitcoin rises, this will reduce potential gains from price increases but will provide regular premium income. (FT)

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