New ETF Combines Bitcoin and Gold, Offers 100% Leveraged Exposure

• According to a latest report, an ETF that seeks to enable investors to gain exposure to both Bitcoin and Gold simultaneously has been filed. 

• The preliminary SEC prospectus discloses that the blending of low-correlation assets is meant to offset short-term price fluctuation. 

A newly proposed Exchange-Traded Fund (ETF) that seeks to expose traders and investors to Bitcoin (BTC) and Gold has been filed. According to a document at our disposal, the STKD Bitcoin&Gold ETF, proposed to be jointly launched by Tidal Investments and Quantify Chaos Advisors, would provide simultaneous exposure to the performance of Bitcoin and Gold through futures and ETFs. On top of that, the ETF would invest primarily in underlying funds that provide exposure to gold, underlying funds that provide exposure to Bitcoin, cash and cash equivalents, and reverse repurchase agreements. 

Bitcoin and Gold join forces in newly filed ETF that uses leverage to give 100% exposure to each.. check it out: https://t.co/LaQp8uuchm— Eric Balchunas (@EricBalchunas) June 27, 2024

The preliminary SEC prospectus also explains that blending assets with low correlations enables the Fund to reduce the impact of short-term fluctuation on the overall investment outcome. Per our review, the ETF would not directly invest in Bitcoin or seek direct exposure to its current spot price. The Fund would also use leverage to “stack” the total returns on holdings in its Bitcoin and gold strategies. 

Essentially, one dollar invested in the Fund provides approximately one dollar of exposure to the Fund’s Bitcoin strategy and approximately one dollar of exposure to the Fund’s Gold strategy. So, the return of the Gold strategy (minus the cost of financing) is essentially stacked on top of the returns of the Bitcoin strategy (minus the cost of financing). The Underlying Funds may gain their exposure to the underlying asset classes either directly, or through the use of derivative instruments, such as futures contracts.

More Information on the Bitcoin and Gold ETF

The document explained how the investment works by stating that users who invest $1 in the Fund would have $1 worth of that investment tracking the performance of the Fund’s Bitcoin strategy. This implies that it would behave similarly to how the Bitcoin price performs. The same move would be made with the performance of Gold’s strategy. Essentially, a single dollar investment would follow and potentially profit or experience loss from two different investment strategies. 

The Fund’s investment strategy is based on the belief that the combination of investing in the Bitcoin strategy and the Gold strategy may provide complementary benefits, given their historically low correlation (their historical price movements have not been closely related). By blending assets with low correlation, the Fund aims to reduce the impact of short-term market fluctuations on the overall investment outcome, potentially providing a more stable investment trajectory.

On the filing, the stacked ETF has an effective date of September 9, 2024. However, there is no stock ticker or any associated fees. 

With this groundbreaking initiative pending approval, the largest gold ETF by market cap, SPDR Gold Trust (GLD), makes a 12.7% gain this year with a market cap of $62 billion. Also, BlackRock’s IBIT, which debuted in January this year, is leading the spot in the Bitcoin ETF market with a market cap of $116 billion and a Year-To-Date gain of 8.2%. 

At press time, Bitcoin was trading at $61,276, having surged by 0.87% in the last 24 hours.