Interest in creating special reserves for bitcoin has been expanding beyond the federal government. Toward the end of April, members of the Arizona Legislature approved a bill to establish a strategic bitcoin reserve that would have allowed the state to invest up to 10% of its public funds in digital assets. However, Arizona Governor Katie Hobbs opted to veto the reserve, saying she considered virtual currencies like bitcoin untested and speculative.
This veto is certainly a setback for bitcoin traders. Yet the policy debate showcases the efforts to legitimize the asset class. Arizona may not yet create its bitcoin reserve, but another state could opt to take up the torch.
Meanwhile, the federal government’s pro-crypto efforts seem to be gaining steam. In the early months of his presidency, President Trump signed an executive order to establish a Strategic Bitcoin Reserve along the lines of existing U.S. reserves of gold and oil. And Paul Atkins, the new SEC chair, is viewed as having a more favorable opinion of cryptocurrency than his predecessor. Regarding initial steps, agencies are required to provide a full accounting of their digital asset holdings to ensure proper oversight and accurate tracking, and legislative efforts are underway to create a legal framework for cryptocurrency management, although some bills have faced challenges.
Be it state or federal policies, investors may want to get ahead of favorable legislation by adding more bitcoin to their portfolios. However, the Arizona debate also highlights the importance of being mindful of volatility when investing in bitcoin.
Plan Ahead With CBXA
For advisors looking to build a risk-conscious bitcoin profile, Calamos Investments offers a suite of Protected Bitcoin ETFs. These funds enable advisors and investors to build crypto access while limiting downside exposure.
For example, the Calamos Bitcoin 90 Series Structured Alt Protection ETF – April (CBXA) uses an options strategy to gain upside exposure to bitcoin’s price performance up to a predetermined cap of 29% over a one-year outcome period.
This upside is paired with a limit on downside volatility. After you pay fees and expenses, CBXA limits maximum losses to no more than 10% across its one-year outcome period.
The global economy is still in the early years of bitcoin legislation, and we should expect more crypto policy to be enacted down the line. For those willing to bet on more bitcoin reserves coming online, Calamos Protected Bitcoin ETFs can help portfolios capitalize on positive news while negating much of the volatility risk.
For more news, information, and analysis, visit the Crypto Channel.
Disclosure Information
Before investing, carefully consider a Fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
The Funds seek to provide investment results that, before taking fees and expenses into account, track the positive price return of the CME CF Bitcoin Reference Rate – New York Variant (“BRRNY”) (“Spot bitcoin”) up to a predetermined upside cap (the “Cap”) while seeking to protect against 100%, 90% or 80%, respectively, of losses (before total fund operating fees and expenses) of Spot bitcoin over a period of approximately one (1) year (the “Outcome Period”). The Funds will not invest directly in bitcoin. Instead, the Funds seek to provide investment results that, before taking total fund operating fees and expenses into account, track the positive price return of Spot bitcoin by investing in options that reference the price performance of one or more underlying exchange-traded products (“Underlying ETPs”) which, in turn, own bitcoin and/or one or more indexes that are designed to track the price of bitcoin (“Bitcoin Index”).
The Target Outcome may not be achieved, and investors may lose some or all of their money. The Funds are designed to achieve the Target Outcome only if an investor buys on the first day of the Outcome Period and holds a Fund until the end of the Outcome Period. While the Funds seek to provide 100%, 90% or 80% protection against losses experienced by the price of Spot bitcoin for shareholders who hold Fund Shares for an entire Outcome Period, there is no guarantee a Fund will successfully do so. If a Fund’s NAV has increased significantly, a shareholder that purchases Fund Shares after the first day of an Outcome Period could lose their entire investment. An investment in the Funds is only appropriate for shareholders willing to bear those losses. There is no guarantee the Capital Protection and Cap will be successful, and a shareholder investing at the beginning of an Outcome Period could also lose their entire investment.
An investment in the Funds is subject to risks, and you could lose money on your investment in a Fund. There can be no assurance that a Fund will achieve its investment objective. Your investment in a Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in a Fund can increase during times of significant market volatility. The Funds also have specific principal risks, which are described below. More detailed information regarding these risks can be found in the Funds’ prospectus.
Digital Assets Risk: The Bitcoin network was first launched in 2009 and bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Although the Bitcoin network is the most established digital asset network, the Bitcoin network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. Moreover, because digital assets, including bitcoin, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this prospectus. Digital assets represent a new and rapidly evolving industry, and the value of the Underlying ETPs’ shares depends on the acceptance of bitcoin. The realization of one or more of the following risks could materially adversely affect the value of the Underlying ETPs’ shares.
Investing involves risks. Loss of principal is possible. The Funds face numerous market trading risks, including authorized participation concentration risk, underlying ETP risk, cap change risk, capital protection risk, capped upside risk, cash holdings risk, concentration risk, clearing member default risk, correlation risk, costs of buying and selling fund shares, counterparty risk, derivatives risk, equity securities risk, FLEX options risk, interest rate risk, investment in a subsidiary, investment timing risk, liquidity risk, management risk, market maker risk, market risk, new fund risk, non-diversification risk, options risk, OTC options risk, position limits risk, premium-discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, U.S. Government security risk, U.S. Treasury risk, and valuation risk. For a detailed list of Fund risks see the prospectus.
100%, 90% or 80% capital protection is over a one-year period before fees and expenses. All caps are predetermined.
Cap Rate – Maximum percentage return an investor can achieve from an investment in a Fund if held over the Outcome Period.
Protection Level – Amount of protection a Fund is designed to achieve over the Days Remaining.
Outcome Period – Number of days in the Outcome Period.
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