New Calamos ETF Promises 100% Protection Against Bitcoin (BTC) Price Volatility

A new exchange-traded fund (ETF) from global investment management firm Calamos, which promises to protect investors from Bitcoin’s price volatility, hit the market on Wednesday.

CBOJ, the first of three ETFs, offers investors 100% downside protection while providing upside potential of 10% to 11.5% over a one-year period, according to a press release. A Calamos representative told CoinDesk that as of 12:11 p.m. ET, the ETF had traded approximately 635,714 shares.

The other two funds, CBXJ and CBTJ, scheduled to launch on February 4, will offer 90% and 80% protection, respectively, with a capped upside of 28% to 30% and 50% to 55%.

Downside protection is achieved through investments in US Treasury bonds and options on Bitcoin index derivatives. The increase cap is set each year and the period is reset each year with new conditions.

Simply put, if an investor purchased $100 worth of shares in the ETF, Calamos would place a percentage of that sum in Treasury bonds that would amount to $100 over a one-year period, thereby ensuring that whatever or the price of Bitcoin. At that point, the investor has the entire $100.

The rest is used to buy options linked to the price of bitcoin, allowing you to gain exposure to the cryptocurrency without owning it directly.

However, this security blanket doesn’t come cheap. ETF management fees are set at 0.69%, higher than other ETFs that invest in bitcoin. The average fee for U.S.-based ETFs is around 0.51%, making these ETFs a bit expensive for investors. However, the higher price could be worth paying for investors seeking security from the volatile digital asset market.

While bitcoin maxis and other investors believe in the long-term increase in the value of bitcoin, many, including traditional institutional investors, are concerned about bitcoin’s volatility and periods of decline. totally free.

One question that may arise from the mechanics of the ETF is whether it would compete with MicroStrategy Convertible Bonds (MSTR), as both offer some downside protection. However, according to CoinDesk analyst James VanStraten, this is not the case. MSTR’s ratings differ from the Calamos ETF in that they do not have a cap on upside potential. If certain criteria are met, these are converted into shares, resulting in potentially higher risk but greater upside potential.

Downside-protecting ETFs have therefore become a popular innovation among issuers in recent months, leading up to the inauguration of crypto-friendly President Donald Trump. This has raised hopes that many of these ETF applications will receive approval from the new Securities and Exchange Commission.

Crypto asset manager Bitwise revamped three of its futures-based crypto ETFs in October to include exposure to Treasuries to protect against crypto price declines. Funds will therefore alternate between investing in crypto and Treasuries based on market signals.