Grayscale unveils Bitcoin ETFs leveraging volatility for income

Grayscale Investments has launched two new Bitcoin-focused (CRYPTO:BTC) exchange-traded funds (ETFs) designed to generate income by capitalising on Bitcoin's volatility.

The products, named the Grayscale Bitcoin Covered Call ETF (BTCC) and the Grayscale Bitcoin Premium Income ETF (BPI), aim to offer alternative revenue streams less correlated to traditional investments.

The BTCC fund employs a covered call strategy, systematically writing options close to Bitcoin's spot price.

This approach seeks to maximise income by collecting premiums from options contracts, which are then distributed to investors.

Grayscale suggests this strategy could complement direct Bitcoin exposure while providing steady cash flows.

Additionally, the premiums collected may act as a buffer against market downturns, potentially reducing volatility during drawdowns.

In contrast, the BPI fund balances income generation with growth potential by writing call options with strike prices significantly above the current market price.

This allows investors to benefit from Bitcoin's upward price movement while earning dividend-like income through option premiums.

Grayscale emphasised that this strategy provides a differentiated source of revenue while enabling participation in Bitcoin's price appreciation.

Both ETFs are actively managed and feature systematic options strategies with monthly income distributions.

David LaValle, Global Head of ETFs at Grayscale, stated that these products cater to investors seeking passive income opportunities tailored to their financial goals.

"We’re excited to offer these new products that not only may capture and deliver income but also offer differentiated outcomes," LaValle noted.

The launch of these ETFs reflects growing interest in crypto-linked investment products in U.S. markets.

Over the past year, asset managers have introduced various ETFs tied to derivatives and sector-specific strategies as demand for cryptocurrency exposure continues to rise.

Grayscale's new offerings underscore its commitment to expanding its investment suite while addressing investor needs for innovative ways to navigate Bitcoin's inherent volatility.

Both funds are expected to provide unique opportunities for diversification within the rapidly evolving crypto investment landscape.

At the time of reporting, the Bitcoin (BTC) price was $83,696.10.