The SEC Approves the First 3x Bitcoin and Ether Funds: Understanding the Risks Involved
Key Summary
The US Securities and Exchange Commission (SEC) has approved the first 3x Bitcoin and Ether funds, which use futures contracts on Cboe BZX. Volatility Shares' 3x Bitcoin and Ether ETFs will triple-leverage the daily movement of their respective cryptocurrencies, resulting in a 9% fund loss for a 10% Bitcoin gain, versus a 1% loss for Bitcoin directly. A 33% daily drop in Bitcoin can wipe out the entire fund, making these products suitable only for short-term traders who monitor positions daily. The 3x Bitcoin fund, ticker BITH, and the 3x Ether fund, ticker ETHK, will launch after registration statements are finalized, with no announced launch date yet.
The SEC just greenlit triple-leveraged Bitcoin and Ether funds, but the math behind how these products work reveals a hidden trap that can drain your balance even when crypto trends in your favor.