First Trust Advisors has introduced two new Bitcoin strategy exchange-traded funds (ETFs) aimed at providing investors structured exposure to Bitcoin, incorporating risk management features and yield generation capabilities.
Amid rising interest from traditional investors seeking innovative approaches to the cryptocurrency sector, First Trust unveiled the FT Vest Bitcoin Strategy Floor15 ETF (BFAP), which seeks to track Bitcoin’s performance within a defined upside, while simultaneously limiting potential losses to approximately 15%. This structure aims to mitigate some of the significant drawdown risks that have historically deterred cautious investors from entering Bitcoin-linked ETFs, according to Ryan Issakainen, an ETF strategist with the firm.
Additionally, First Trust launched the actively managed FT Vest Bitcoin Strategy & Target Income ETF (DFII). This ETF seeks not only partial Bitcoin exposure but also intends to generate additional income through option trading strategies. Specifically, DFII targets a yield at least 15% higher than short-dated U.S. Treasury instruments through the active selling of call options. Issakainen highlighted that DFII leverages Bitcoin’s volatility to achieve income generation, while both ETFs employ a derivatives-based approach to offer downside protections.
Following their initial emergence in early 2024, Bitcoin ETFs rapidly became one of the year’s hottest investment segments. According to recent market information, by early April, ETFs holding spot Bitcoin assets collectively held roughly $93 billion under management. Despite their popularity, these funds also recently experienced volatility sparked by macroeconomic news; specifically, U.S. President Donald Trump’s announcement of new tariffs led to market turbulence, resulting in nearly $100 million in outflows from spot Bitcoin ETFs on April 3 alone.
Other industry players have also capitalized on the demand for structured Bitcoin exposure. Grayscale recently introduced two Bitcoin strategy ETFs employing derivatives to manage risk and produce incremental income, similar in concept to the First Trust offerings. In another strategic move in March, Bitwise launched an ETF focused on stocks of firms holding substantial Bitcoin reserves, underscoring the innovative approaches asset managers continue to adopt within this evolving investment landscape.
