Major cryptocurrency asset manager Grayscale Investments has unveiled two new exchange-traded funds (ETFs) focused on Bitcoin outcomes.
In an announcement made on April 2, the new offerings include the Grayscale Bitcoin Covered Call ETF (BTCC) and the Grayscale Bitcoin Premium Income ETF (BPI). The funds are designed to capitalize on Bitcoin’s price fluctuations to generate revenue, as explained in a communication shared with interested parties:
“Both strategies may serve as an alternative income stream that is less correlated to traditional income-oriented investments.”
### A Complex Derivative Product
The Bitcoin Covered Call ETF aims to maximize potential income by targeting the highest premiums available. Grayscale suggests it can enhance one’s Bitcoin exposure.
The strategy for this fund involves consistently writing call options that are close to the current market price, with the anticipation that Bitcoin’s historically high volatility will yield income through these call options.
Conversely, the Bitcoin Premium Income ETF aims to provide investors with both income generation and the chance for upside. It serves as an alternative to direct Bitcoin ownership, seeking a balance between capital appreciation and income.
This fund systematically writes calls targeting strike prices that are significantly out of the money on Bitcoin ETFs, including the Grayscale Bitcoin Trust (GBTC) and Grayscale Bitcoin Mini Trust (BTC). According to the announcement:
“By employing this call writing strategy, BPI allows investors to capture much of Bitcoin’s upside potential while potentially benefiting from some dividend income.”
### Just the Latest Development
Earlier this week, Grayscale also filed to introduce an ETF that will hold a diversified selection of spot cryptocurrencies, including Bitcoin, Ether (ETH), XRP, Solana (SOL), and Cardano (ADA).
In late March, the Nasdaq submitted a request to the US Securities and Exchange Commission (SEC) to list Grayscale’s proposed Avalanche spot ETF. According to Grayscale’s website, they currently offer 28 crypto products, with 25 being single-asset derivatives and three being diversified options.
Grayscale is also awaiting approval for its XRP spot ETF, along with other products, including a spot Cardano ETF filing and the conversion of its Litecoin Trust into an ETF.