Summary:
REX Shares launched two new Bitcoin ETFs: T-REX 2X Long Bitcoin Daily Target ETF (BTCL) and T-REX 2X Inverse Bitcoin Daily Target ETF (BTCZ).
These ETFs offer 200% leverage, allowing traders to double down on Bitcoin's price volatility.
They utilize financial derivatives instead of holding Bitcoin directly.
Leveraged ETFs are known to underperform the underlying asset in the long run due to the constant leverage trap.
These ETFs charge a high management fee of 0.95%, which can further impact returns.
Bitcoin Volatility Gets a Boost: 200% Leveraged ETFs Arrive
High-conviction Bitcoin traders now have a new way to play the market's volatility: 200% leveraged ETFs. REX Shares, known for its leveraged tech stock ETFs, has launched two new funds:
- T-REX 2X Long Bitcoin Daily Target ETF (BTCL): Aims to deliver 2x the daily return of Bitcoin's price.
- T-REX 2X Inverse Bitcoin Daily Target ETF (BTCZ): Aims to deliver 2x the inverse daily return of Bitcoin's price.
These ETFs don't directly hold Bitcoin, instead using financial derivatives to achieve their leverage goals. This launch comes amidst a recent surge in Bitcoin ETF inflows, fueled by recent price dips and institutional interest.
The Leveraged Trap: A Potential Pitfall
While offering high potential returns, leveraged ETFs also come with risks. Leveraged ETFs are known to underperform the underlying asset in the long run due to the 'constant leverage trap', where funds constantly buy low and sell high to maintain their leverage target. Additionally, their high management fees (0.95% for these new ETFs) can further impact returns.
These new ETFs represent an exciting development in the Bitcoin ETF landscape, offering a new avenue for traders to capitalize on price volatility. However, investors must be aware of the risks associated with leveraged ETFs before investing.
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