Markets
New ETF Lets Traders Short Coinbase as Crypto Stocks Seen as ‘Most Volatile ETFs Ever’ – DL News
- YieldMax has launched a Coinbase ETF.
- The fund allows investors to short sell the company’s shares.
- It also produces a yield probably close to 4% per year.
While the cryptocurrency community feverishly awaits the launch of Ethereum exchange-traded funds, Wall Street firms are creating other ETFs to bet on the sector.
YieldMax ETF issuer Coinbase launched an inverse ETF on Tuesday.
The fund — FIAT token — allows traders to profit from falling Coinbase shares while also earning a yield.
And it’s not the only ETF that relies on the performance of a cryptocurrency company.
Cryptocurrency ETFs galore
YieldMax’s new ETF is for investors who want to make money when Coinbase goes down.
The background It works like this: It trades bearish options contracts, called puts, while trading bullish options contracts, known as calls, in the short term.
This allows the fund to perform well when stocks fall.
But the ETF also sells puts to earn a yield — which it then distributes as a dividend to the fund’s holders.
Join the community to receive our latest stories and updates
Most YieldMax ETFs that follow the same strategy produce an annual yield of approximately 4%.
Products for bulls
YieldMax also has a product for Coinbase investors.
The company launched a Coinbase ETF that produces a yield of 4.89%, which is also bullish for the company’s stock.
He also offers similar strategies for Bitcoin and MicroStrategy.
Meanwhile, ETF issuer Rex Shares filed on June 27 for a MicroStrategy ETF that will allow investors to gain double leverage on the company’s stock.
“These are almost guaranteed to be the most volatile ETFs ever seen in the U.S.,” said Bloomberg Intelligence ETF analyst Eric Balchunas. posted in X.
The fund “will likely be in the neighborhood of 20 times the volatility of the S&P 500,” he added.
The new ETF filings — and launches — come as MicroStrategy and Coinbase have become some of the most popular actions to short the US stock market.
Cryptocurrency Market Movers
- Bitcoin is up 1.4% in the past 24 hours to $58,443.
- Ethereum is down 0.5% over the same period to around $3,080.
What we are reading
Tom Carreras is a markets correspondent at DL News. Got any tips on Bitcoin and markets? Get in touch at tcarreras@dlnews.com