Bitcoin prices continue to set new records post-election, benefiting from the tailwinds of another Fed interest rate cut. Prices crossed above $77,000 briefly for the first time in trading Friday, reported The Block. For investors with a risk appetite for the largest cryptocurrency, the recently launched NEOS Bitcoin High Income ETF (BTCI) combines bitcoin (BTC) investing with options income that benefits from volatility.
The outlook for cryptocurrencies appears more optimistic after the U.S. presidential election. VanEck’s CEO, Jan Van Eck, appeared on CNBC’s Power Lunch today to tout the potential of the most popular cryptocurrency.
“My basic premise is ultimately bitcoin’s value will be half of that of all the gold outstanding so you’re talking about something like $300,000 for bitcoin,” Van Eck explained. Meanwhile, BlackRock’s spot bitcoin ETF surpassed its gold ETF for assets under management today in a strong sentiment shift towards BTC investing, reported CoinTelegraph.
Earn Income While Bitcoin Investing
Investors with a high risk appetite wanting to invest in bitcoin would do well to consider the BTCI. It 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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