An array of funds now exist for enthusiastic investors hoping to seize the potential tailwinds for crypto under the incoming administration in January. Those investors with the risk appetite for bitcoin investing don’t want to miss the NEOS Bitcoin High Income ETF (BTCI) when filling out their portfolio.
Bitcoin continues to climb to new highs in the final weeks of the year as perceived catalysts fuel gains. From SEC Chair Gensler’s remarks early this month that markets interpreted favorably to the incoming administration’s vocal support for the crypto economy, bitcoin prices logged fresh new highs mid-month. Initially crossing the $100,000 threshold for the first time early in December, bitcoin currently trades above $107,500 as of December 17, 2024.
Investors that believe the largest cryptocurrency has room for further gains in 2025 currently have a variety of funds to gain exposure. For those with the risk appetite for pronounced volatility inherent to the space, BTCI offers opportunity to harness volatility for income while bitcoin investing.
Make Bitcoin Volatility Work for Your Portfolio
BTCI is actively managed and seeks to generate monthly income through its covered call strategy while providing exposure to spot bitcoin through ETPs. 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 27.60% as of November 30, 2024. 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 have BTC futures ETFs as 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 managers use a rules-based, systematic, proprietary model to determine 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%.
For more news, information, and analysis, visit the Tax Efficient Income Channel.
