Calamos Launches Bitcoin-Protective ETF With Unique Features

According to CoinDesk, a new exchange-traded fund (ETF) by global investment management firm Calamos has entered the market, offering investors protection against bitcoin's price volatility. The ETF, named CBOJ, is the first of three funds designed to provide 100% downside protection while allowing for a 10% to 11.5% upside potential over a one-year period. As of 12:11 p.m. ET on its launch day, approximately 635,714 shares of the ETF had been traded, according to a Calamos representative. The other two ETFs, CBXJ and CBTJ, are scheduled to launch on February 4 and will offer 90% and 80% downside protection, respectively. These funds will have capped upside potentials of 28% to 30% and 50% to 55%. The downside protection is achieved through investments in U.S. Treasuries and options on Bitcoin index derivatives. The upside cap is set annually, with terms resetting each year. This structure allows investors to gain exposure to bitcoin without directly owning it, as a portion of the investment is allocated to Treasury bonds to ensure the initial investment is preserved. Despite the protective features, the ETFs come with a management fee of 0.69%, which is higher than the average fee of 0.51% for U.S.-based ETFs. This higher cost may be justified for investors seeking safety from the volatile digital assets market. While some investors, particularly those who are bullish on bitcoin's long-term value, may overlook these fees, traditional institutional investors often express concerns about bitcoin's volatility. The ETF's mechanics raise questions about potential competition with MicroStrategy's convertible bonds, which also offer downside protection. However, CoinDesk analyst James VanStraten notes that MicroStrategy's notes differ as they do not cap upside potential and can convert into equities under certain conditions, presenting higher risk but also more upside. ETFs offering downside protection have gained popularity recently, especially with the anticipation of a more crypto-friendly regulatory environment under President Donald Trump's administration. This trend has led to hopes that more ETF applications will receive approval from the Securities and Exchange Commission. In a related development, crypto asset manager Bitwise revamped three of its futures-based crypto ETFs in October to include exposure to Treasuries, aiming to protect against crypto price drops by rotating investments based on market signals.