Volatility at its peak: 3x BTC ETFs approved

[LuckyCrypto777]

The first triple-leveraged funds on Bitcoin (and Ethereum) have been approved in the US. Their price will move approximately three times faster than BTC and ETH in a single day.
Such instruments are particularly risky, but the very fact that the SEC has approved them demonstrates how far crypto has already penetrated traditional markets.

In my opinion, this will increase volatility and slightly improve liquidity. After all, risk funds will be interested.

https://ru.tradingview.com/news/coinpedia:ae4fa82b5094b:0-sec-approves-3x-leveraged-bitcoin-ether-and-other-etps-for-listing/

[Oshosondy]

But bitcoin ETF 3X is very risky, just like those products like BTC 3X long on exchanges that are listed under the spot market. You can say it will give more liquidity, but the first thing you should think about is liquidation and how risky they are. I have been seeing some news about it recently I think in August or early September.

[LuckyCrypto777]

But bitcoin ETF 3X is very risky, just like those products like BTC 3X long on exchanges that are listed under the spot market. You can say it will give more liquidity, but the first thing you should think about is liquidation and how risky they are. I have been seeing some news about it recently I think in August or early September.

That's why I never traded with leverage. With a smart strategy and averaging, a normal trader can get by with a regular spot.

I'd guess that funds aren't just regular traders, and the loss of deposits won't be that significant in the overall ratio. But in any case, it's a boost to trading volumes.

[slaman29]

The first triple-leveraged funds on Bitcoin (and Ethereum) have been approved in the US. Their price will move approximately three times faster than BTC and ETH in a single day.

Massive milestone blablabla I'm actually bored with ETF news for BTC.

Remember guys, ETFs leveraged like this just makes or loses money faster (price doesn't move faster btw OP). But does it change things on chain? Nope. Does it increase the risk of extreme liquidation yes.

Doesn't affect me, or most people using BTC, but the news will.

[atookz]

One more note: the listing rule is the one that the SEC approved – not the products themselves – so they cannot be traded just yet. They are still awaiting the S-1 registration to go into effect and there's no launch date yet. They also don't hold actual BTC, they use CME futures.

As @slaman29 mentioned, it's not the BTC price that is changing faster, it is the profits and losses of the holder. The "3x" is only valid per day. For example, if BTC goes up 10% then down 10%, the result is -1%, but with a 3x product, up 30% then down 30% gives you -9%. A market that continues to fluctuate in price will steadily erode the value. It's known as volatility decay.

The difference from 3x longs on exchanges is that there's no margin call or liquidation, so the most you can lose is what you put in. However, if BTC experiences a significant sell-off on one day, the value could be completely erased. Volume and liquidity will probably rise, but it's difficult to say how much impact it will have on the spot price, as they are futures-based products.

[Alphakilo]

But bitcoin ETF 3X is very risky, just like those products like BTC 3X long on exchanges that are listed under the spot market. You can say it will give more liquidity, but the first thing you should think about is liquidation and how risky they are. I have been seeing some news about it recently I think in August or early September.

The risk may be high enough but the fact remains that cryptocurrency has become more mainstream than it ever was and it is even allowed for regular stocks market.
Wall Street funds can now trade crypto currency and this is definitely going to boost trading volume and am sure just as speculated, this may likely trigger sharp price swings mostly during the close of market.

[nelson4lov]

But bitcoin ETF 3X is very risky, just like those products like BTC 3X long on exchanges that are listed under the spot market. You can say it will give more liquidity, but the first thing you should think about is liquidation and how risky they are. I have been seeing some news about it recently I think in August or early September.

If you think a Bitcoin 3x ETF is risky, what do you have to say about people who use 10x leverage, up to 100x leverage on crypto exchanges right now? The ETF is for people who need more exposure to Bitcoin but have limited capital. The 3x ETF gets them there, and it's fundamentally different from the use of leverage on exchanges.

This type of ETF already exists in TradFi, and people use it a lot.

[shinratensei_]

Went from "Bitcoin is too volatile, it's too risky" to "We need 3x of Bitcoin volatility" in just few years is funny as hell. Institutional players initially refuse the existence of bitcoin not because it's bad but because they don't know how to make money yet. But i really hope none of those fund managers invest into this thing, too risky. Any leveraged trade is unnecessary risk if the intention wasn't speculation or gambling. Well, the fiduciary duty won't let any sane fund managers invest in this anyway.

[Don Pedro Dinero]

But bitcoin ETF 3X is very risky, just like those products like BTC 3X long on exchanges that are listed under the spot market. You can say it will give more liquidity, but the first thing you should think about is liquidation and how risky they are. I have been seeing some news about it recently I think in August or early September.

This shows just how fully integrated Bitcoin is into the financial system. There were already 3X ETFs on the Nasdaq 100, for example. And, yes, they are risky. If things go your way, you make money much faster, but you can also go bust much faster.

One more note: the listing rule is the one that the SEC approved – not the products themselves – so they cannot be traded just yet. They are still awaiting the S-1 registration to go into effect and there's no launch date yet. They also don't hold actual BTC, they use CME futures.

As @slaman29 mentioned, it's not the BTC price that is changing faster, it is the profits and losses of the holder. The "3x" is only valid per day. For example, if BTC goes up 10% then down 10%, the result is -1%, but with a 3x product, up 30% then down 30% gives you -9%. A market that continues to fluctuate in price will steadily erode the value. It's known as volatility decay.

The difference from 3x longs on exchanges is that there's no margin call or liquidation, so the most you can lose is what you put in. <...>]

Those are good points to bear in mind. In any case, even though it is different and there is no margin call or liquidation, it is a product that is obviously riskier than simply holding bitcoin or buying a bitcoin ETF.

[tbct_mt2]

The first triple-leveraged funds on Bitcoin (and Ethereum) have been approved in the US. Their price will move approximately three times faster than BTC and ETH in a single day.
Such instruments are particularly risky, but the very fact that the SEC has approved them demonstrates how far crypto has already penetrated traditional markets.

In my opinion, this will increase volatility and slightly improve liquidity. After all, risk funds will be interested.

Triple leverages won't make price moving faster than no leverage in a single day. Such things are risky and trigger many liquidations in short time, not in long term. In long term, price follows value quite closely while in short term, leverages are affected by market manipulations and liquidations, both with long squeeze and short squeeze.

Leverages are always risky and fast way to lose money, in any markets, with any assets, and with any leverages. When you use leverages, risk escalates and there will be risk of liquidations in the future.

[slaman29]

As @slaman29 mentioned, it's not the BTC price that is changing faster, it is the profits and losses of the holder. The "3x" is only valid per day. For example, if BTC goes up 10% then down 10%, the result is -1%, but with a 3x product, up 30% then down 30% gives you -9%.

This is almost the exact example I've used to describe leverage to people. Break even is not break even, because of the cost/fees associated (and leverage for some, even incurs higher cost).

Those are good points to bear in mind. In any case, even though it is different and there is no margin call or liquidation, it is a product that is obviously riskier than simply holding bitcoin or buying a bitcoin ETF.

Yup, 'easier' because no calls/forced liquidation but you bet ETF fees are going to be higher.

[tiCeR]

Those are good points to bear in mind. In any case, even though it is different and there is no margin call or liquidation, it is a product that is obviously riskier than simply holding bitcoin or buying a bitcoin ETF.

Yup, 'easier' because no calls/forced liquidation but you bet ETF fees are going to be higher.

Time is flying by and when I read about 3x leverage, those old times come to mind when there were brokers around here that offered up to 1,000x leverage, lol.

I am not I sure I remember the names correctly, but there was 1broker and I think they were renamed into a new provider or was 1broker the successor of a former provider?

Leveraged exposure can make sense if you know how to design your portfolio, but I think the number of people using it in a considerate or strategic way is rather small. I gambled around with those high leverages many years ago and I still think it is worse than lottery. Sure it raises your heartbeat when it goes the right way for a few minutes, but it is not enjoyable as essentially every price tick/jump could mean the end for your position.

[JeffBrad12]

Lots of folks thought 3x BTC ETF as risky, well it is, except 3x ETF is pretty common and having 3x ETF means the ETF got many demands.
As risky as it is, 3x ETF is completely optional tailored for active short term traders who don't trade for long term.
Even though volatility decay sucks big time, it's the cost of presenting you a leveraged ETF in a market where regulation is super strict, it shouldn't even be comparable to how crypto exchange manage their perpetual market.

[Hamza2424]

The first triple-leveraged funds on Bitcoin (and Ethereum) have been approved in the US. Their price will move approximately three times faster than BTC and ETH in a single day.
Such instruments are particularly risky, but the very fact that the SEC has approved them demonstrates how far crypto has already penetrated traditional markets.

In my opinion, this will increase volatility and slightly improve liquidity. After all, risk funds will be interested.

Hmm, it says more about the demand for gambling products than it does about crypto maturing, bro. But if the S&P, oil, and gold already have this product, then there is nothing surprising about them approving it for BTC too. They now treat BTC the same way as a commodity and an investment vehicle. Anyway, this will surely add more fuel to liquidity and volatility, mainly, and we have to analyze their monthly or weekly stats to stay updated, especially the futures ETFs and 3x leveraged BTC ETFs now.

Anyway, it's the regulatory machine doing its job normally because this also shows that BTC now has enough volume to meet the requirements, as the approval also indicates something about BTC if we know on what basis they approved it.

[slaman29]

<>
Time is flying by and when I read about 3x leverage, those old times come to mind when there were brokers around here that offered up to 1,000x leverage, lol.

I am not I sure I remember the names correctly, but there was 1broker and I think they were renamed into a new provider or was 1broker the successor of a former provider?

Leveraged exposure can make sense if you know how to design your portfolio, but I think the number of people using it in a considerate or strategic way is rather small. I gambled around with those high leverages many years ago and I still think it is worse than lottery. Sure it raises your heartbeat when it goes the right way for a few minutes, but it is not enjoyable as essentially every price tick/jump could mean the end for your position.

Remember this is ETFs we're talking about, very different from margin or leverage trading, as you'll read in our quotes, no margin call, no liquidation. Different rules for institutional investors but its large amounts of money, probably involving very high management fees and all kinds of guarantor deals.

[atookz]

.....it is a product that is obviously riskier than simply holding bitcoin or buying a bitcoin ETF.

Agreed. Because of the daily reset and volatility decay, this is an instrument to be traded on a short-term basis, even in the absence of a margin call. If the price of BTC drops by approximately 33% in one day, a 3x long fund will lose all its value.

.....Break even is not break even, because of the cost/fees associated (and leverage for some, even incurs higher cost).

Exactly. On top of the mathematical drag from the daily reset, there is an added layer of fees. If BTC falls 10% one day and rises 11.1% the next, a 3x fund would end up about 6.7% below its starting value (−30%, then +33.3%). For these products, "back to where I started" is not synonymous with break even.

[xenomorfo]

Lots of folks thought 3x BTC ETF as risky, well it is, except 3x ETF is pretty common and having 3x ETF means the ETF got many demands.
As risky as it is, 3x ETF is completely optional tailored for active short term traders who don't trade for long term.
Even though volatility decay sucks big time, it's the cost of presenting you a leveraged ETF in a market where regulation is super strict, it shouldn't even be comparable to how crypto exchange manage their perpetual market.

I honestly don't understand why we should buy these things in the bitcoin forum, sorry if I'm practically a bit anachronistic and a bit of a pain in the ass.
We are in the bitcoin forum, do you buy bitcoin? I don't understand what profit there is in buying these products you mention.

[aoluain]

Thats risky business for sure.

Just goes to proove that there is an appetite for people and companies to jump in on the
volatility of the Bitcoin market and also its the market volatility really isnt that negative as
it was made out to be in the past. Looks like the institutions see that there are profits to be
made from this volatility.

Now it also looks like with their large holdings they can scare the market to their advantage
by just moving a large amount to a different address and some people will respond with panic.

Lots of folks thought 3x BTC ETF as risky, well it is, except 3x ETF is pretty common and having 3x ETF means the ETF got many demands.
As risky as it is, 3x ETF is completely optional tailored for active short term traders who don't trade for long term.
Even though volatility decay sucks big time, it's the cost of presenting you a leveraged ETF in a market where regulation is super strict, it shouldn't even be comparable to how crypto exchange manage their perpetual market.

I honestly don't understand why we should buy these things in the bitcoin forum, sorry if I'm practically a bit anachronistic and a bit of a pain in the ass.
We are in the bitcoin forum, do you buy bitcoin? I don't understand what profit there is in buying these products you mention.

The average Bitcoiner like most on this forum wouldnt be entertaining these products.