The cryptocurrency market continues to evolve, and Grayscale, a leader in crypto asset management, has introduced two new exchange-traded funds (ETFs) designed to cater to investors seeking to navigate bitcoin’s well-known volatility while generating income. These funds, listed on the New York Stock Exchange, are set to begin trading this Wednesday.
The newly launched funds, the Bitcoin Covered Call ETF (BTCC) and Bitcoin Premium Income ETF (BPI), utilize covered call writing strategies. This approach involves selling call options, allowing investors to collect premiums as a source of income. Call options, as a reminder, are derivatives that grant the holder the right, though not the obligation, to purchase an asset at a specified price during a defined timeframe.
The BTCC focuses on writing calls that are very close to the market’s spot prices. This strategy aims to provide a steady cash flow for investors while the premiums collected could potentially mitigate losses during market downturns. On the other hand, the BPI seeks to capitalize on options with significantly out-of-the-money strike prices—those that are considerably higher than the current spot price. This strategy allows investors to benefit from bitcoin’s potential upside while also possibly earning additional income through dividends, as noted in Grayscale’s announcement.
Both ETFs will employ options contracts that track other significant bitcoin ETFs, including Grayscale’s own Bitcoin Trust (GBTC) and Bitcoin Mini Trust (BTC). This is an important consideration, as the influx of institutional investments into bitcoin through spot ETFs has surged since their introduction in January 2024.
Despite this wave of institutional interest, bitcoin’s volatility remains a key characteristic that investors need to manage. Following a remarkable 48% surge in the fourth quarter of 2024, bitcoin began 2025 on a less optimistic note, experiencing a 12% decline in what is traditionally a bullish first quarter. It’s notable that the largest cryptocurrency surged by 72% and 69% in the first quarters of 2023 and 2024, respectively, as per data sourced from Coinglass.
As the appetite for bitcoin grows among institutional investors, there is an increasing demand for innovative financial products like Grayscale’s newly launched ETFs. These offerings promise to provide not only exposure to bitcoin but also differentiated sources of income that may help investors weather the inherent volatility of this dynamic asset class.
