Defiance Offers 3x Leverage Exposure to Bitcoin, Ethereum Funds and Crypto Stocks

An asset management company known for its exchange-traded funds for risk-tolerant investors wants to extend the reach of these thrill-seeking investors, filing 49 funds that offer 3x long-short leverage on ETFs that individually track the prices of technology- and crypto-focused companies and assets such as gold, Bitcoin, Ethereum and Solana.

Defiance Investments’ N-1A prospectus, filed with the U.S. Securities and Exchange Commission on Friday, includes proposals for a 3x leveraged ETF and an inverse leveraged ETF for crypto exchange giant Coinbase, Bitcoin Treasury’s MicroStrategy, brokerage firm Robinhood, Ethereum Treasury’s Bitmine Immersion, and USDC stablecoin issuer Circle. It also aims to provide similar exposure to Grayscale’s Bitcoin and Ethereum Minitrust ETF and Volatility Shares’ Solana ETF.

Companies like Defiance already offer double-leverage ETFs for short-term investors that ask them to speculate on the direction of specific stocks, many in the technology sector, over the course of a day.

The company’s current products include the Daily Target 2X Long MSTR ETF (MSTX) and Daily Target 2X Long HOOD (HOOX), which seek to double the strategy and Robinhood’s daily stock price movements.

3x leveraged funds are much rarer, and many observers of the space doubt that issuers will seek to introduce more such products, but it could be a bad bet if the underlying assets take an unexpected turn. The prospectus itself repeatedly warns that the various funds proposed may not be suitable for all investors.

“Things are getting intense,” said James Seifert, a Bloomberg ETF analyst. made a joke In a Friday X post about Defiance’s products.

Still, the proposal, which includes crypto-focused products, is in line with the issuer’s growing efforts to respond to investor demand for funds based on digital assets. On Friday, LeverageShares and Theme Trust included 3x long and short funds focused on COIN and HOOD among 14 ETFs in their proposal to the SEC.

As of late August, regulators were weighing more than 90 ETFs that track individual tokens, coin combinations, and different strategies. These once-seemingly unlikely applications have followed the huge success of Spot Bitcoin and Ethereum ETFs, which now boast around $150 billion in assets in BTC funds alone, according to data from analytics platform CoinGlass.

by text to decryption, ETF.com Senior ETF analyst Sumit Roy pointed to market concerns about the 3X fund and its potentially limited audience.

“Conventional wisdom was that the SEC intended to only allow 2x leverage going forward, but these filings suggest that the SEC intends to allow more volatile products to come to market,” Roy wrote.. “If launched, these would be extremely risky funds designed for the most aggressive short-term traders. ”