Under an administration actively involved in the crypto economy, bitcoin increasingly captures the curiosity and interest of investors. For those looking to bitcoin for income, the NEOS Bitcoin High Income ETF (BTCI) continues to generate significant distribution rates nearly four months since launch.
The current presidential administration lives up to campaign promises with a supportive stance towards the crypto economy. David Sacks, A.I and crypto czar, recently announced plans this year to build out regulations regarding crypto, reported CNBC.
“They are very committed to moving legislation through the House and the Senate this year in order to provide that clear regulatory framework that the digital assets ecosystem needs to sustain innovation in the United States,” said Sacks last week in an interview with CNBC. “Moving legislation through Congress takes time, but I think this is something we could do in the next six months.”
See also: Advisors Look to Income Plays in Bitcoin This Year
The administrative sentiment shift in support of the digital economy may prove a tailwind for digital assets looking ahead. Those investors looking to bitcoin for opportunity should consider the NEOS Bitcoin High Income ETF (BTCI). Launched last October, the fund is actively managed and seeks to generate monthly income through its covered call strategy while providing exposure to spot bitcoin through exchange traded products. The ETPs that the fund invests in hold BTC and track its price performance before fees and expenses.
BTCI currently offers a distribution rate of 29.50% as of January 31, 2025. Distribution rate annualizes the most recent distribution and then divides by the fund’s NAV.
The fund invests in bitcoin futures ETFs and options contracts that use BTC futures ETFs for their reference asset. This creates synthetic exposure to BTC through BTC futures while also writing covered call options on BTC futures ETFs to generate high monthly income. The strategy uses a rules-based, systematic, proprietary model to determine its options positions.
Covered call options entail buying an asset while also writing a call on the underlying asset. This generates a premium but also caps the upside potential should the underlying asset appreciate. Options strategies like BTCI often benefit from volatility, earning higher premiums on call writing (and thereby income) when volatility spikes. Given bitcoin’s enhanced volatility, it could prove an attractive source of additional income for BTC investors.
The fund’s managers may also engage in tax-loss harvesting to capture losses in order to offset gains made.
BTCI has an expense ratio of 0.98%.
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