REX Shares and Tuttle Capital Management have launched the T-REX 2X Long Bitcoin Daily Target ETF (CBOE: BTCL) and the T-REX 2X Inverse Bitcoin Daily Target ETF (CBOE: BTCZ). These new offerings, introduced on July 10, provide investors with leveraged exposure to Bitcoin’s price volatility, allowing for 200% gains or losses based on Bitcoin’s daily performance.
Leveraged Exposure Through Derivatives
Unlike traditional Bitcoin ETFs that hold the cryptocurrency directly, these new ETFs utilize financial derivatives. This approach provides either leveraged or inverse exposure to Bitcoin. The launch aligns with a period of increased interest in Bitcoin ETFs, with a remarkable $650 million inflow since July 5. This surge follows recent Bitcoin price drops, triggered by significant liquidations by Germany’s government and the now-defunct Japanese exchange Mt. Gox.
Scott Acheychek, COO of REX Financial, emphasized the strategic timing of these new ETFs. “Bitcoin’s meteoric rise in 2024 has captured the attention of investors and traders worldwide. By launching 2X leveraged and inverse Spot Bitcoin ETFs, we’re arming traders with powerful tools to capitalize on Bitcoin’s price swings like never before,” he said.
REX Shares’ Growing Portfolio
The introduction of these Bitcoin ETFs expands the “T-REX” lineup, which has now surpassed $5 billion in total assets under management (AUM). Notably, over $1 billion of this was accumulated in the past year through the T-REX funds alone.
Considerations for Investors
While these leveraged ETFs offer substantial potential rewards, they also come with notable risks. Leveraged ETFs frequently underperform the underlying assets due to the constant leverage trap. This phenomenon forces funds to adjust their holdings by buying low and selling high to maintain their leverage target. Additionally, the management fees for these ETFs are relatively high. Both new T-REX ETFs charge a 0.95% management fee, which is significantly higher than the approximately 0.2% fees for spot Bitcoin ETFs like Franklin Templeton Digital Holdings Trust (EZBC), VanEck Bitcoin Trust (HODL), and iShares Bitcoin Trust (IBIT).
REX Shares and Tuttle Capital Management’s new ETFs offer an aggressive strategy for traders looking to leverage Bitcoin’s price movements. However, investors should be aware of the higher costs and potential performance issues associated with leveraged ETFs before diving in.
