According to a recent report, a new Exchange-Traded Fund (ETF) has been proposed to offer investors exposure to both Bitcoin and Gold simultaneously. The preliminary SEC prospectus reveals that this combination of low-correlation assets is designed to mitigate short-term price volatility.
The STKD Bitcoin&Gold ETF, proposed by Tidal Investments and Quantify Chaos Advisors, aims to provide dual exposure to Bitcoin and Gold through futures and ETFs. The fund will invest primarily in underlying funds that provide exposure to gold and Bitcoin, along with cash, cash equivalents, and reverse repurchase agreements.
Bitcoin and Gold unite in this innovative ETF that uses leverage to provide 100% exposure to each. For more details, check out this link:
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— Eric Balchunas (@EricBalchunas) June 27, 2024
The preliminary SEC prospectus further explains that blending assets with low correlations helps the Fund reduce the impact of short-term market fluctuations on the overall investment outcome. Notably, the ETF will not directly invest in Bitcoin or seek direct exposure to its spot price. Instead, it will use leverage to “stack” the total returns of its Bitcoin and Gold strategies.
In practical terms, one dollar invested in the Fund provides approximately one dollar of exposure to the Fund’s Bitcoin strategy and one dollar of exposure to the Fund’s Gold strategy. This means the returns of the Gold strategy, minus the cost of financing, are essentially stacked on top of the returns of the Bitcoin strategy, minus the cost of financing. The underlying funds may gain their exposure to the asset classes either directly or through derivative instruments like futures contracts.
More Information on the Bitcoin and Gold ETF
The document outlines that an investment of $1 in the Fund would result in $1 tracking the performance of the Fund’s Bitcoin strategy, mirroring the behavior of Bitcoin prices. Similarly, the performance of the Gold strategy would follow the same pattern. Therefore, a single dollar investment would track and potentially profit or experience loss from two distinct investment strategies.
The Fund’s investment strategy is based on the idea that combining the Bitcoin and Gold strategies may offer complementary benefits due to their historically low correlation. By blending these low-correlation assets, the Fund aims to reduce the impact of short-term market fluctuations, potentially offering a more stable investment trajectory.
The filing indicates that the stacked ETF has an effective date of September 9, 2024. However, no stock ticker or associated fees have been disclosed yet.
As this groundbreaking initiative awaits approval, the largest gold ETF by market cap, SPDR Gold Trust (GLD), has gained 12.7% this year with a market cap of $62 billion. Additionally, BlackRock’s IBIT, which debuted in January, is leading the Bitcoin ETF market with a market cap of $116 billion and a Year-To-Date gain of 8.2%.
At the time of writing, Bitcoin was trading at $61,276, having risen by 0.87% in the last 24 hours.
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– What is Bitcoin?
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