This week, a new bitcoin ETF will be launched. This ETF is designed to attract a certain type of investor from the sidelines.
The Calamos Bitcoin Structured Alt Protection ETF — January (CBOJ) is set to offer “systematic risk management” Across its approximately one-year result period. Matt Kaufman of Calamos Investments ETF noted that, in other words, those who purchase on the day BTC is first traded will be protected if their shares are held throughout this time period.
It is important to read all the small print.
Investors can gain exposure to BTC with 100% protection from the downside. However, there is one slight catch. The potential upside will be capped at a certain amount (to be determined by launch day on Jan. 22).
CBOJ will achieve its strategy by investing in FLEX options and other assets such as US Treasury Securities.
Demand for US Bitcoin ETFs in the first year has exceeded many expectations.
A number of wealth managers — and even pension funds — have bought into them. In spite of this, 13F filings show that many buyers were retail investors.
Here’s a new product that could prove to be game-changing for some. Kaufman, of Calamos, argues that financial advisers and institutional investors are willing to sacrifice some gains in exchange for the assurance they will be protected against losses and reduced risk.
“Such a capital-protected bitcoin strategy should exhibit relatively low volatility, though likely higher than a capital-protected strategy tied to the equity market,” He told me.
Bitwise/VettaFi published a report earlier this month that found advisors interested in sophisticated crypto investment strategy. Roughly a quarter of those surveyed expressed interest in buffered strategies — aka “defined outcome” funds — that seek to mitigate crypto’s volatility.
What is the Bitwise/VettaFi translation? These pros allocating for clients “want access to strategies that can provide a differentiated set of returns beyond buy-and-hold exposure.”
Kaufman said that some investors may choose to combine CBOJ or other bitcoin ETFs with spot products like BlackRock IBIT. “to reduce the risk of loss and shape their experience.”
This is easy to understand for a company executive who sells such ETFs. Data on flow over time can give us an idea of demand for this type of tool.
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