New ETF allows traders to short Coinbase as crypto stock plays seen as ‘most volatile ETFs ever’

New ETF allows traders to short Coinbase as crypto stock plays seen as ‘most volatile ETFs ever’
Snapshot
The new ETF enables traders to profit from Coinbase’s stock going down while earning a yield at the same time. Credit: Justin Lane/EPA-EFE/Shutterstock
  • YieldMax launched a Coinbase ETF.
  • The fund allows traders to short the company’s stock.
  • It also produces a yield likely to be close to 4% annually.

While the crypto community feverishly awaits for the launch of spot Ethereum exchange-traded funds, Wall Street firms are spinning up other ETFs to bet on the industry.

ETF issuer YieldMax ETF launched an inverse Coinbase ETF on Tuesday.

The fund — ticker FIAT — enables traders to profit from Coinbase’s stock going down while earning a yield at the same time.

And it’s not the only ETF riding on the performance of a crypto company.

Crypto ETFs galore

YieldMax’s new ETF is for investors that want to make money when Coinbase slumps.

The fund works like this: It longs bearish option contracts, called puts while shorting bullish options, known as calls.

That allows the fund to perform well when the stock goes down.

But the ETF also shorts puts to earn a yield — which it then distributes as a dividend to the fund’s holders.

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Most of YieldMax’s ETFs that follow the same strategy produce an annual yield of roughly 4%.

Products for bulls

YieldMax also has a product for Coinbase bulls.

The firm has launched a Coinbase ETF that produces a 4.89% yield that is also bullish on the company’s stock.

It also offers similar strategies for Bitcoin and MicroStrategy.

Meanwhile, ETF issuer Rex Shares filed on June 27 for a MicroStrategy ETF that will enable investors to gain twice the amount of leverage on the company’s stock.

“These are a near-lock to be the most volatile ETFs ever seen in the US,” Bloomberg Intelligence ETF analyst Eric Balchunas posted on X.

The fund “will likely be in the neighbourhood of 20 times the volatility of the S&P 500,” he added.

The new ETF filings — and launches — come as MicroStrategy and Coinbase have become some of the most popular stocks to short in the US stock market.

Crypto market movers

  • Bitcoin is up 1.4% in the last 24 hours to $58,443.
  • Ethereum is down 0.5% over the same period to about $3,080.

What we’re reading

Tom Carreras is a markets correspondent at DL News. Got a tip about Bitcoin and markets? Reach out at tcarreras@dlnews.com