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On July 10, investment managers REX Shares and Tuttle Capital Management launched two new exchange-traded funds (ETFs) that enable high-conviction Bitcoin&nbsp;traders to double down on long or short positions with 200% exposure to Bitcoin’s price volatility.&nbsp;
The <a href="https://www.businesswire.com/news/home/20240710680336/en/REX-Shares-and-Tuttle-Capital-Management-Launch-2X-Leveraged-and-Inverse-Spot-Bitcoin-ETPs" target="_blank" rel="noopener nofollow">two funds</a>&nbsp;— 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 hold spot Bitcoin (<a href="https://cointelegraph.com/bitcoin-price">BTC</a>)&nbsp;directly. Instead, they use financial derivatives to deliver 2x leveraged or inverse exposure to spot BTC.
Bitcoin ETFs have seen white-hot inflows in the past week amid a sharp pullback in spot prices spurred by multibillion-dollar BTC liquidations by Germany’s government and Mt. Gox, the defunct Japanese crypto exchange. Approximately $650 million has flowed into BTC ETFs since July 5, <a href="https://farside.co.uk/?p=997" target="_blank" rel="noopener nofollow">according</a> to Farside Investors.
Related: <a href="https://cointelegraph.com/news/spot-bitcoin-etf-inflows-654-million-over-three-days">Spot Bitcoin ETFs buy up $654M of BTC in 3 days</a>
The ETFs bolster REX Shares’ existing suite of “T-REX” products, which include funds offering leveraged exposure to mega-cap technology stocks such as Apple (AAPL), Nvidia (NVDA) and Tesla (TSLA). In June, REX Shares surpassed $5 billion in assets under management (AUM), with its T-REX funds pulling upward of $1 billion since last year.
Leveraged ETFs tend to significantly underperform relative to the underlying spot asset as well as other strategies for gaining leveraged exposure to asset prices, according to a <a href="https://www.gsr.io/reports/understanding-the-perils-and-potential-of-leveraged-etfs/" target="_blank" rel="noopener nofollow">report</a>&nbsp;by crypto trading firm GSR Markets. 
The report said this is partly due to a phenomenon known as the constant leverage trap, whereby funds are forced to buy low and sell high to maintain a fixed leverage target. Leveraged ETFs also tend to charge relatively high management fees, adding an additional drag on performance. 
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 <img src="https://s3.cointelegraph.com/uploads/2024-07/9d62eb04-068a-4e48-b6b0-cd99242263dd.png" alt="High-conviction Bitcoin traders targeted in new long BTC ETFs" title="">
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 Leveraged ETFs tend to underperform in the long run. Source: GSR
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Rex Shares’ two new ETFs each charge management fees of 0.95%. That is significantly higher than spot BTC ETFs — such as Franklin Templeton Digital Holdings Trust (EZBC), VanEck Bitcoin Trust (HODL) and iShares Bitcoin Trust (IBIT) — which will charge fees of around 0.2% on average once promotional discounts expire. 
Magazine: <a href="https://cointelegraph.com/magazine/bitcoin-layer2-sidechains-not-really-bitcoin-l2s/">‘Bitcoin Layer 2s’ aren’t really L2s at all: Here’s why that matters</a>

High-conviction Bitcoin traders targeted in new long BTC ETFs

Cointelegraph

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