The Bitcoin and Gold ETF will use leverage to “stack” the total return of its Bitcoin strategy holdings with the total return of its gold strategy holdings.
In a major development on Thursday, June 27, Quantify Chaos Advisors and Tidal Investments filed a prospectus proposing a new exchange-traded fund (ETF) that gives investors exposure to both – Bitcoin and Gold – without buying any of these assets.
The STKD Bitcoin & Gold ETF will use leverage and provide simultaneous exposure to the performance of Bitcoin and Gold via BTC futures and ETFs, as well as Gold futures and ETFs.
As we know, over the years, Bitcoin has popularly emerged as a Digital Gold and is seen as a strong store of value within the crypto community. While Bitcoin has given higher returns than the yellow metal over the past decade, the physical still holds strong demand in the market.
As per the preliminary filing by Quantify Chaos Advisors, the idea of combining the Bitcoin strategy with the Gold strategy can provide complimentary benefits. As we know, bitcoin still continues to be a highly volatile asset class while Gold is largely stable in this regard. The filing notes:
“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.”
Here’s How the Bitcoin and Gold ETF Will Function
According to the filing, the ETF will use leverage to “stack” the total return of its Bitcoin strategy holdings with the total return of its Gold strategy holdings. The ETF will not invest directly in Bitcoin, other digital assets, gold, or gold bullion, nor will it seek direct exposure to the current spot price of Bitcoin. the filing explains:
“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.”
The SPDR Gold Trust (GLD) is currently the largest Gold ETF with a market cap of $62 billion. Since the beginning of the year, it has given 12.7% returns.
On the other hand, the spot Bitcoin ETF debuted just earlier this year with BlackRock’s IBIT having the lion’s share. With a market cap of $116 billion, IBIT is the leader in the industry and has gained 8.2% year-to-date.
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