USCF has just registered a new ETF that combines crude oil and Bitcoin, providing access to both asset classes in a single fund.
This investment fund will use Bitcoin and crude oil futures contracts to provide 100% exposure to each, creating a 2x leveraged fund focused on oil and cryptocurrency.
MAIN CONTENT
USCF filed to establish the Oil Plus Bitcoin ETF with 2x exposure to crude oil and Bitcoin.
The fund invests in Bitcoin futures contracts, related ETP certificates, and oil futures indirectly through a subsidiary in the Cayman Islands.
There is significant risk due to the volatility of oil and Bitcoin markets, and the 2x leverage structure increases the risk of loss.
How did USCF register the Oil Plus Bitcoin ETF?
USCF, an investment management company specializing in commodity ETF/ETP products, has just registered a new Oil Plus Bitcoin ETF that offers 100% exposure to crude oil and Bitcoin, meaning the fund focuses simultaneously on both asset classes.
The fund will invest in Bitcoin futures contracts (including micro futures) and Bitcoin ETP certificates listed on U.S. stock exchanges. According to the filing, Bitcoin futures contracts must be cash-settled, traded on U.S. and international exchanges.
Eric Balchunas, senior Bloomberg analyst, noted that this ETF allows for “2x exposure” simultaneously to crude oil and Bitcoin, creating a double leverage effect by combining profits from both assets.
What does this project mean for USCF?
The key feature of the ETF allows the fund's performance to reflect price fluctuations of both crude oil and Bitcoin, helping investors take advantage of opportunities in both traditional energy and digital asset sectors.
This fund expands its investment scope, combining Oil Futures and Bitcoin Futures as well as some Bitcoin ETP certificates through a subsidiary in the Cayman Islands to optimize profits while ensuring compliance with U.S. federal tax law by limiting investment in the subsidiary to no more than 25% of fund assets.
“The fund will not invest more than 25% of total assets in the USCF Cayman Commodity 10 subsidiary to ensure compliance with U.S. tax regulations.”
Excerpt from the USCF ETF registration, 2024
What are the risks associated with the Oil Plus Bitcoin ETF?
The fund is influenced by sharp fluctuations in crude oil prices in the global market, along with specific risks of Bitcoin when investing indirectly through futures contracts and ETP certificates.
Additionally, the fund's 2x leverage structure significantly increases inherent risks, not just potential profits but also losses, with volatility and daily compounding effects that can lead to complex and unpredictable results.
“The integration of 2x leverage on two traditional and cryptocurrency asset classes will increase the level of risk and volatility, requiring investors to be vigilant and have appropriate risk management strategies.”
Eric Balchunas, Senior Bloomberg Analyst, 2024
Frequently Asked Questions
What is the Oil Plus Bitcoin ETF?
This is an ETF that provides 2x exposure to crude oil and Bitcoin, investing in futures contracts and related certificates to benefit from the price fluctuations of both asset classes simultaneously.
How does the fund invest to comply with U.S. taxes?
The fund invests indirectly through a subsidiary based in the Cayman Islands and limits investments here to no more than 25% of total assets to comply with U.S. federal tax regulations.
What is the biggest risk when investing in Oil Plus Bitcoin ETF?
The high volatility of oil and Bitcoin prices, combined with the risks from the 2x leverage structure, can amplify both profits and losses, requiring tight risk management.
Does the fund invest directly in Bitcoin?
No, the fund primarily invests in cash-settled Bitcoin futures contracts and Bitcoin ETP certificates, without holding cryptocurrencies directly.
What is the difference between this fund and traditional oil or Bitcoin ETFs?
The fund combines simultaneous exposure to both crude oil and Bitcoin, applying 2x leverage, differing from ETFs that focus solely on a single asset class.
Source: https://tintucbitcoin.com/uscf-de-xuat-etf-bitcoin-dau-tho/
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