Bitcoin prices surged this week on President-elect Trump’s tapping of Paul Atkins to lead the SEC and comments from current SEC Chair Jerome Powell comparing the digital currency to gold. As bitcoin hovers near $100,000, interested investors should consider the +*NEOS Bitcoin High Income ETF*+ (BTCI ) for its income generation potential.
The selection of former SEC commissioner Atkins creates potential tailwinds for crypto should Atkins gain Senate approval. The former commissioner is a proponent of cryptocurrencies and supports developing the crypto economy in the U.S., reported NPR.
Outgoing Chair Gensler took a strong, cautionary stance towards cryptocurrencies, citing elevated volatility, fraud, and more when advocating against making the asset class more readily available to investors. It’s a position that frustrated many U.S. crypto enthusiasts.
At a summit on Wednesday, Powell likened bitcoin to gold, a move that sent bitcoin prices climbing. “It’s like gold, it’s just like gold — only it’s digital,” Powell told attendees of the New York Times DealBook Summit, reported inkl. “It’s not a competitor for the dollar; it’s really a competitor for gold. That’s really how I think about it.”
Harness Bitcoin Volatility for Income With BTCI
Bitcoin, known for its elevated volatility and higher risk profile, fell sharply Tuesday for a period of time in the wake of South Korea’s short-lived martial law. The cryptocurrency recovered, but such swings are not uncommon. Such volatility benefits strategies like the NEOS Bitcoin High Income ETF (BTCI ) that harnesses volatility for income. The fund generated a 27.6% distribution rate in its first month of trading. Distribution rate annualizes the most recent distribution and then divides by the fund’s NAV.
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.
The fund also 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%.
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