The world of exchange-traded funds (ETFs) is about to receive a new addition: a unique product offering investors exposure to both Bitcoin and gold. This brainchild of Tidal Investments and Quantify Chaos Advisors, called STKD Bitcoin and Gold ETFtakes an innovative approach by leveraging both assets for a potentially smoother ride in an often volatile investment landscape.
Marrying opposites: a 100% bet on diversification
Traditionally, Bitcoin and gold have been viewed as somewhat opposing forces in the investment world. Bitcoin, the volatile darling of the cryptocurrency scene, is known for its rapid price fluctuations.
Gold, on the other hand, is considered a safe haven asset – or what most would call “God’s money” – often sought out during economic downturns because of its perceived stability. STKD ETF capitalizes on this same difference.
Using leverage, the ETF aims to amplify the returns of Bitcoin and gold through a combination of futures contracts and existing ETFs focused on each asset class. This “stacking” strategy, as described in the filing, essentially links the performance of the two assets within the ETF.
New Stacked Bitcoin and Gold ETF Launched
Bitcoin and Gold ETF STKD
ticker and fees to be determined
Effective date: September 9, 2024The use of leverage simultaneously provides exposure to the performance of #Bitcoin and gold through Bitcoin futures and ETFs, as well as gold futures and ETFs.
Investment sub-advisor… pic.twitter.com/9GyOYuwqKv
– ETF Hearsay by Henry Jim (@ETFhearsay) June 27, 2024
The theory behind it is that since Bitcoin and gold have historically exhibited a low correlation – meaning their prices have not moved in tandem – the combined effect will be a more stable investment trajectory.
As of today, the market cap of cryptocurrencies stood at $2.25 trillion. Chart: TradingView.com
Regulatory obstacles remain
The innovative design of the STKD ETF is certainly attracting attention, but there are still hurdles to overcome before it can be released to the market. The most important is regulatory approval from the United States Securities and Exchange Commission. The SEC has historically been cautious about approving Bitcoin ETFs, citing concerns about market manipulation and volatility.
Tidal Investments and Quantify Chaos ETF to Offer Dual Exposure to BTC and Gold
Investment companies Tidal Investments and Quantify Chaos Advisors recently filed a Bitcoin & Gold ETF with the US SEC on June 27, according to The Block. This ETF is designed to track changes in the value of gold…
– CoinNess Global (@CoinnessGL) June 28, 2024
A Sign of Market Maturity? Bitcoin ETFs Gaining Ground
The STKD ETF proposal comes at a time when Bitcoin ETFs are experiencing a resurgence in popularity. Traditional spot Bitcoin ETFs, which directly track the price of Bitcoin, have seen significant inflows in recent weeks. This trend suggests a growing appetite among investors for regulated exposure to the cryptocurrency.
The success of spot Bitcoin ETFs paves the way for more innovative products like STKD. It’s a sign that the cryptocurrency market is maturing and attracting interest from a broader range of investors.
Featured image from TechLog360, chart from TradingView
