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Bitcoin ETFs have been a hit with investors in 2024, and now asset management companies are starting to build ways to combine crypto and derivatives into traded packages.
The new products are set to launch this month. Asset Manager Calamos announced on Monday that it will launch a Structured protection ETF which aims to give investors a way to capture some of bitcoin’s upside with 100% downside protection.
The fund will combine options exposure on the US Cboe Bitcoin ETF Index with Treasury holdings and is designed to be held for 12 months. The exact upside cap will be determined on January 22, based on option prices. It will be traded under the ticker CBOJ.
The fund essentially brings a popular equity ETF strategy to crypto investing. The products of the defined result, including buffer fundshave boomed in recent years as investors look for new ways to diversify their portfolios. Its gain in popularity was apparently helped by the market sell-off of 2022, when stocks and bonds declined.
Spot bitcoin funds launched in January 2024 and had probably the best debut in ETF history. The funds combined to rake in tens of billions of dollars and helped fuel the bitcoin race to a record high over $100,000.
Bitcoin has rallied sharply since ETFs tracking the cryptocurrency were approved last January.
The inflows and the crypto rally pushed the iShares Bitcoin Trust ETF (IBIT)the most popular of the funds, more than $50 billion in total assets.
However, Matt Kaufman, head of ETFs at Calamos, said his team believes financial advisors are still largely avoiding bitcoin because of its history of volatility, and that these structured funds can win.
“For people looking to access that space, they want to do it in a risk-managed framework, or something that makes a little more sense for their portfolio,” Kaufman said. He also thinks that investors will keep the Calamos fund in line with pure bitcoin ETFs.
Calamos is not the only ETF manager working on how to marry crypto exposure with other popular fund styles.
Innovator and First trust are two other ETF issuers that have presented to launch funds with strategies similar to those of Calamos. Firms are also looking to combine bitcoin with income-generating strategies, including covered call funds offered by issuers such as Gray scale and Roundhill.
More funds are likely to be introduced throughout 2025, especially with a Securities and Exchange Commission that is expected to be more crypto-friendly under the president-elect. Donald Trump.
How does it work?
The Calamos fund is designed to be held for a period of 12 months. The stated maintenance period is January 22, 2025 to January 31, 2026. Because the bitcoin exposure is built for options, which change in price as their expiration date approaches , it is possible that investors who sell the fund in advance will get it. less than the expected gain from a bitcoin rally and could even suffer a loss.
Calamos Bitcoin Structured Alt Protection ETF – January
| Ticker | Holding Period | Downside Target Protection | Annual fee |
|---|---|---|---|
| CBOJ | 22/01/2025-31/01/2026 | 100% | 0.69% |
Source: Reeds
Calamos also plans to launch “plan” funds that offer 90% and 80% protection for bitcoin, allowing some initial losses in exchange for more upside.
Kaufman said that the structure of the bitcoin products that work will probably look different from traditional buffer funds, which protect against the first percentage loss declared, due to the volatility in crypto.
“If you look at the S&P 500 returns, it looks like a normal bell curve distribution. If you look at the distribution of bitcoin returns, it looks a lot more like a curve. It’s all tail risk left or extreme right on top. So if you’ve built a buffer, you’re not really protecting against much of anything,” Kaufman said.
Another thing to look at is how the options market grows with funds. The options linked to the bitcoin ETF only started to expire at the end of 2024. The liquidity problems for the options have undermined the performance of leveraged funds linked to MicroStrategywhich is often seen as a proxy for bitcoin.
“We’re not concerned about capacity,” Kaufman said of the options market for Calamos funds.
