Highlights:
- STKD’s ETF offers leveraged exposure to both Bitcoin and gold, aiming to hedge against inflation risks.
- The growing interest in digital and traditional assets drives new ETF launches ahead of U.S. elections.
- Investors seek diversified strategies, using Bitcoin and gold as hedges against economic uncertainties.
STKD has launched a new exchange-traded fund (ETF) that gives investors leveraged exposure to Bitcoin and gold. This launch comes at a time when investors are continuously looking for ways to protect themselves against declining currencies as the US presidential election nears.
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🚨 BREAKING: STKD has launched a Bitcoin & Gold ETF (BTGD) offering leveraged exposure to $BTC and gold as a debasement trade.
This actively managed fund aims to protect investors from inflation and currency debasement by combining digital and physical assets.
— Blockinsider (@BlockInsider_) October 16, 2024
Every dollar invested in the managed ETF provides exposure to Bitcoin and gold. This is done by combining ETFs and future contracts of the values of the assets.
Understanding the Debasement Strategy
The term debasement trade refers to increased interest in assets such as gold as a result of inflation and economic instability. Since 2022, this trend has continued, mostly due to enduring geopolitical unpredictability and concerns about long-term inflation.
STKD’s BTGD ETF hopes to benefit from this trend. It aims to appeal to investors seeking a balance of capital appreciation and portfolio preservation by providing exposure to both assets. According to the company, the argument between Bitcoin and gold fails to recognize that both have important functions for investors seeking diversification.
The Mechanics Behind the BTGD ETF
The BTGD ETF is unique in that it gives leveraged exposure to both Bitcoin and gold. It promises to give 100% exposure to its Bitcoin strategy and 100% to its gold strategy for every $1 invested. However, the fund will not directly invest in either Bitcoin or gold. It will instead hedge its Bitcoin exposure with Bitcoin futures and exchange-traded products (ETPs) as well as gold futures and ETPs in support of its gold strategy.
The advantage of this technique, STKD noted, is that it allows investors to make money from the volatility of each asset’s price, without actually owning them. Leveraged exposure, however, comes with more risks. The costs from daily rebalancing and other forms of maintaining leverage targets may lead to underperformance in these ETFs as investors.
Recent ETF Trends Leading Up to U.S. Elections
STKD’s new offering comes as the industry attempts to capitalize on cryptocurrencies before the November election in the United States. Meanwhile, Canary Capital has recently announced its intention to launch Litecoin-focused ETFs. In addition, Bitwise plans to launch an XRP ETF.
Crypto asset management company Bitwise has taken the initial steps to launch an XRP ETF. Bitwise registered a trust entity in Delaware on Tuesday, which is the first step in applying to list and trade ETF shares. https://t.co/uJne1IlgQv
— Wu Blockchain (@WuBlockchain) October 2, 2024
The STKD ETF is designed for both individual and institutional investors seeking a simple way to diversify their portfolios.
Risks and Considerations for Potential Investors
The BTGD ETF is a great option but comes with its risks. Indirectly investing in Bitcoin exposes the fund to the possibility of Bitcoin still being a relatively emerging digital currency. As Bitcoin prices are highly volatile, statutory changes can result in major changes in value.
Changes in the commodities markets are the main factor driving the risk of the fund’s exposure to gold. In addition, the fund depends on derivatives, so its performance may not match that of a derivative or the underlying asset or index exactly. That can result in a loss of principle exceeding the original investment.
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