First Trust Introduces Two Bitcoin Strategy ETFs to Balance Yield and Risk
First Trust Advisors has officially launched two new Bitcoin Strategy Exchange-Traded Funds (ETFs), offering investors structured exposure to Bitcoin with strategies focused on yield generation and risk mitigation. These ETFs aim to make Bitcoin investing more accessible to traditional market participants by minimizing downside risk and enhancing income potential through innovative use of financial derivatives.
The launch reflects a broader industry trend where fund managers are rolling out Bitcoin-linked ETFs designed to bridge the gap between the high-volatility crypto market and the more risk-conscious preferences of institutional and retail investors.
One of the newly introduced products, the FT Vest Bitcoin Strategy Floor15 ETF (BFAP), provides performance exposure to Bitcoin with a capped upside, while simultaneously limiting drawdown risk to approximately 15%. According to First Trust, this ETF is tailored for investors who seek Bitcoin returns but are wary of its notorious price fluctuations.
“Over the past few years, investors have shown a remarkably strong appetite for bitcoin-linked ETFs, but the potential for sharp drawdowns has kept many on the sidelines,” said Ryan Issakainen, ETF Strategist at First Trust.
Complementing BFAP is the FT Vest Bitcoin Strategy & Target Income ETF (DFII)—an actively managed fund designed to offer partial exposure to Bitcoin while generating a consistent yield. The fund’s goal is to outperform short-dated U.S. Treasurys by a margin of at least 15%, leveraging the volatility of Bitcoin to produce income through call option selling strategies.
Issakainen explained that DFII is structured to capitalize on Bitcoin’s high volatility by selling call options—financial contracts that give the buyer the right to purchase the underlying asset at a predetermined price. This strategy is aimed at producing steady income while offering partial Bitcoin market participation. The BFAP fund also utilizes derivative instruments to protect investors against severe price declines.
Options—including both call and put contracts—are essential tools used by these ETFs to manage exposure and risk. By integrating options into their investment strategies, these funds offer a more calculated and structured approach to Bitcoin investing.
Structured Bitcoin Investment Vehicles Gain Momentum
Since their regulatory greenlight in January 2024, spot Bitcoin ETFs have rapidly emerged as one of the most sought-after investment products. As of April 4, spot BTC ETFs collectively manage around $93 billion in assets, according to blockchain analytics platform Bitbo.
In addition to First Trust, other asset managers are also entering the space with tailored Bitcoin ETF offerings. For example, Grayscale—a leading crypto asset manager—recently launched two Bitcoin strategy ETFs that similarly employ derivative-based strategies to manage risk and generate income.
Furthermore, in March, Bitwise introduced an ETF composed of equities from companies with significant Bitcoin holdings, reflecting another approach to gaining indirect exposure to the cryptocurrency.
Despite the bullish interest, volatility remains a constant factor. On April 3, spot Bitcoin ETFs experienced nearly $100 million in outflows following heightened market uncertainty triggered by former President Donald Trump’s announcement of sweeping tariffs the day prior. This reinforces the importance of risk-managed vehicles like BFAP and DFII for long-term investors seeking a more stable entry point into the digital asset market.
Read Also: Metaplanet issues $13.3M bonds to buy more Bitcoin
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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