Volatility Shares submitted a filing to start 5x leveraged ETFs of Bitcoin, Ethereum, Solana, and XRP. The exposure would be reset on a daily basis, and these funds would multiply the gains or losses on a daily basis by five using futures and swaps. Bitcoin can give traders 10 percent gain in case it increases by 2 percent, and 10 percent loss if it decreases.
Daily Rebates and Volatility Decay.
These ETFs are created to trade in the short term. They are rebalanced on a daily basis and thus keeping them too long in volatile markets results in losses as a result of volatility deterioration. A week of low swings and high sidewaysness would take away all gains.
High Risk, High Fees
The current fee of 2x Bitcoin ETF at Volatility Shares is 1.85% in contrast to the 0.25% fee at BlackRock. It is probable that the 5x versions would follow. Rolling futures and daily spreads are costly as well, particularly when volatility goes off.
Constructed to be Traders, Not Investors.
History proves leveraged ETFs are poor in certain volatile markets. Bitcoin and Solana volatility stand at 40-87 and thus a 5x product is more gamble than strategy. Day traders may find these ETFs appealing, but they will turn into a self-destructing bet to the majority.
