The Defiance ETF has submitted applications to the Bitcoin and Ethereum-related Market-Based Trade Fund (ETF) called NBIT and DETH, which implement the hedge fund arbitrage strategy.
Eric Balknath, a senior ETF analyst at Bloomberg, shared the filing on September 16, noting that the fund operates a strategy to buy spot crypto assets while cutting futures contracts to win premiums.
Funds will purchase spot Bitcoin and Ethereum ETFs such as BlackRock’s IBIT and ETHA, and will shorten futures contracts to profit from the price difference at the same time.
Bloomberg ETF analyst James Seifert has documented Ethereum base transactions, which provide an average total annual return of around 10% during stable market conditions.
At the same time, Bitcoin-based trading has reached 11% in the last few months, touching double digits during the volatile period.
The market neutral structure of trade generates returns regardless of cryptocurrency price direction by exploiting inefficiency between spot and derivative markets.
Performance data reveals market-neutral benefits
According to a Seyffart analysis, we experienced single-digit and negative performance during market stress from late December 2025 to mid-March 2025, but up until much of 2025, Ethereum-based returns remained at around 10% yields for most of 2025.
Bitcoin basic trading consistently produced low single-digit returns through the first quarter, before climbing to a level of nearly 8% by late July.
Base trade utilizes insurance premiums that cryptocurrency futures contracts command more than their regular spot prices. Bitcoin futures premium reached 17% per year after the election in November before it was eased to its current levels.
Defiance establishes itself through innovative crypto adjacent products. The company has launched its leveraged single stock ETFS strategy and riot platform, a Bitcoin proxy.
Defiance also submitted a “BattleShares” ETF. At the same time, it holds a long short position across the Bitcoin and Ethereum and Bitcoin and Gold pairs.
The new filings will be added to a pile of nearly 100 crypto-related ETF filings awaiting a decision by the Securities and Exchange Commission.
The company’s proposed funds will allow retail investors to access the institutional strategy without the operational complexity required to carry out the underlying transactions independent of capital requirements.
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