What do you think of this 2x BTC ETF?

I know you don’t like ETFs, but assuming you do, there's one that is 2x and pays 13% interest at the end of each month. Thoughts? —Devin

My off-the cuff response was to make it clear I was not familiar with them and to check-out Microstrategy (MSTR) if she was interested in an exchange-traded Bitcoin proxy.

I decided to take a closer look. The specific ticker in question is BITX from Volatility Shares. I was not familiar with them, but I don't follow the ETFs closely. From their website (emphasis mine):

• BITX is structured as a 2x leveraged, daily resetting, ETF — it seeks to provide daily results corresponding to 2x the return of BTC for a single day
•  The Fund is intended to be used as a short-term trading vehicle
• Investors in the Fund should actively manage and monitor their investments, as frequently as daily.
• An investor could potentially lose the full value of their investment within a single day.
• The Fund does not invest directly in BTC, it buys cash-settled Bitcoin Futures Contracts.
• Generally BITX rolls BTC futures daily from the sooner-to-expire month one futures contract (M1) to the longer-to-expire month two futures contract (M2)
• It also adjusts its holdings each day to maintain its daily 2x exposure
• Fees and expenses 1.9%

In other words, the ETF doesn't offer any sort of interest or dividend, doesn't own any BTC and is mostly a tool for degens active speculators who understand the risks of leverage and futures (ie. if you have to lookup what contango, cash and carry arbitrage, VIX or backwardation mean, this is not for you).

If a "normal ETF" can be considered "paper BTC", then this thing is "synthetic paper BTC"

Digging around a little, my intuition proved correct: MSTR has outperformed BITX

Some of the important points to be aware of, if thinking of allocating to MSTR or an ETF, chiefly:

• They have an underlying business that generates positive cashflow which they use to accumulate more BTC
• There are no fees for holding the stock
• They have been able to raise debt aggressively and intelligently to increase their BTC stack as well as their shareholders "sats per share"

In closing, if you're looking for exchange-traded exposure to BTC, there is no second best to MSTR in my book, they really are re-writing the playbook.

Speaking of ETFs and options, the SEC has just granted approval for options on Blackrocks ETF. This will mean industrial-strength tools for degenerate gambling professional risk management and is likely to attract more liquidity to Bitcoin which most people agree is good.

Some lament options will dampen Bitcoin's legendary volatility while others claim they may increase it, citing its 24/7 trading hours, fixed supply and other characteristics as potential catalysts for a "vanna gamma squeeze" —which Jeff Park compares to a "refueling rocket"— meaning under certain conditions price could move explosively up.

Just buy, hold in self-custody and enjoy the fireworks.

It's your turn next:

Bitcoin News

Growing Up

If I had to find a common thread for most of last week's Bitcoin news it'd be that BTC is growing up, and this is visible across several domains:

Banks

It seems BNYMellon will be the first major US bank to be approved as a Bitcoin custodian.

Bank custody is a natural (hence positive) step in the broader acceptance of Bitcoin. Should you custody your BTC with a bank? Hell naw, but some people inevitably will.

BlackRock's Pom-Poms

BlackRock released a surprisingly well argued white paper touting BTC's properties as a hedge in times of economic uncertainty.

And if that didn't catch your attention there was this note in Forbes

Power

We now have Bitcoin mining with nuclear energy in the US.

Expect to see more of this.

Financial KPIs

Taking a page from Microstrategy's, some companies are adopting a new metric: sats per share, which focuses the company on maximizing the amount of bitcoin held per share.

Not all Rainbows

This doesn't mean there are no significant challenges ahead, there are indeed and one of the big ones is centralization of block formation. While it's true that there are nominally several pools, under the surface they are behaving as one large entity. Solutions are being worked on and there is cause to be hopeful, but this is not something that will fix itself.

There is also regulatory pressure, new information has revealed that operation Chokepoint 2.0 —an attempt to de-bank crypto— was not just a product of Bitcoiner's tinfoil hats, the government basically took them out the back and shot them.

Finally, much of the media remains laughably biased. It's sad to see Wired leading the charge on dishonest and misleading journalism.

Politics

Contrast Trump's embarrassing and ill-conceived shitcoinery crypto-antics

with RFK's well-written, well-informed letter in defense of Bitcoin mining.

Fiat News

Price News

Bitcoin Surfing

Bitcoin climbed on the Board ($59.9k) last week and is trying to get its nose above Water ($63.6k)

Dip Fishing

Price now holding the $62.5k to $65k range. While we may see $60k again, I'm not so sure about $56k

Calm Chart

September holding modesty green after the rate cut. We'd have to go back near $58k for it to flip red again.