As the Bitcoin price attempts new all-time highs, there’s been a surge in demand for investment vehicles offering leverage exposure to BTC. Leveraged futures-based exchange-traded funds, like VolatilityShares’ 2x Bitcoin Strategy ETF (BITX), are experiencing inflows comparable to those of spot Bitcoin ETFs. Data from K33 Research indicates that the fund attracted $630 million in net monthly inflows, ranking just behind BlackRock and Fidelity in terms of inflow volume.
Futures-based Bitcoin ETFs are currently holding a record-high equivalent exposure of 83,300 tokens, while leveraged Bitcoin ETFs make up nearly 25% of the open interest on CME, one of the largest marketplaces for crypto derivatives. K33 Research reports that futures premiums on the platform have surged to around 20% amid the highest-ever open interest.
According to a note on Tuesday, the significant increase in flows to 2x leveraged BTC ETFs demonstrates a substantial demand for leveraged long exposure to BTC and aligns with the heightened risk appetite observed in BTC derivatives. The surge in open interest in CME is primarily driven by “enormous inflows” to the fund.
As per K33 data, VolatilityShares’ 2x fund now holds a Bitcoin equivalent exposure of 36,025 tokens. Thus, it has more than doubled the cryptocurrency under management within the first 11 days of March.
The growing interest in such funds has further spurred the launch of several new offerings. ProShares plans to introduce five leveraged long and short BTC ETFs in the next month to meet the rising market demand, while Valkyrie recently launched its 2x leveraged product.
As investors flock to capitalize on the ongoing bull run in the crypto market, the demand for leveraged bets has become evident. US-based institutions often opt for regulated offerings like crypto futures on CME and spot ETFs from traditional asset managers.
Conversely, offshore entities frequently turn to options contracts on Deribit and perpetual futures without expiration dates on platforms like Binance, which are among the favored products for crypto traders.
Funding rates for Bitcoin perpetual futures, a critical gauge for leverage in the crypto market, remain notably high across major offshore exchanges. Deribit, a leading crypto options trading platform, has also witnessed record open interest and a notable uptick in bullish positions on Bitcoin
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