On July 10, investment managers REX Shares and Tuttle Capital Management launched two new exchange-traded funds (ETFs) that provide 200% exposure to Bitcoin (BTC) price fluctuations.
These two funds, the T-REX 2X Long Bitcoin Daily Target ETF (CBOE: BTCL) and the T-REX 2X Inverse Bitcoin Daily Target ETF (CBOE: BTCZ), do not directly own spot BTC. Instead, they provide 2x leveraged or inverse exposure to spot BTC using financial derivatives.
The German government and the bankrupt Japanese crypto exchange Mt. Bitcoin ETFs saw white-hot inflows last week, when there was a sharp pullback in spot prices due to multi-billion dollar BTC liquidations by Gox. According to Farside Investors, approximately $650 million has flowed into BTC ETFs since July 5.
The new ETFs strengthen the existing lineup of "T-REX" products, which include funds that offer leveraged exposure to mega-cap tech stocks like Apple ( AAPL ), Nvidia ( NVDA ), and Tesla ( TSLA ). In June, REX Shares surpassed $5 billion in assets under management (AUM), with T-REX funds withdrawing over $1 billion since last year.
Leveraged ETFs typically significantly underperform strategies to gain leveraged exposure to asset prices relative to the underlying spot asset, according to a report by crypto trading firm GSR Markets.
Rex Shares' two new ETFs charge 0.95% as management fees. This is significantly higher compared to the spot BTC ETFs â Franklin Templeton Digital Holdings Trust (EZBC), VanEck Bitcoin Trust (HODL), and iShares Bitcoin Trust (IBIT) â which will charge around 0.2% on average after promotional discounts end .
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