The total assets under management of BITX and BITU have increased to over $1.39 billion. BITU, which was introduced in April, has quickly accumulated $266 million in assets, reflecting significant investor demand.
Additionally, the T-REX 2X Bitcoin Daily ETF was recently launched. These funds aim to generate returns twice that of Bitcoin on a daily basis.
Historically, leveraged funds have outperformed the underlying asset in rising markets. For instance, the ProShares UltraPro QQQ ETF (TQQQ), which yields double the daily return of the Nasdaq 100 index, has seen a 2,300% increase over the past decade, compared to the Nasdaq 100 index’s 420% rise in the same period.
BITX and BITU aspire to replicate this performance due to Bitcoin’s longstanding bullish trend since its inception, with a 27% rise in BITX and a 25.8% increase in the BITX ETF. However, in the last month, Bitcoin has experienced a 17% drop, with BITX and BITU decreasing by 32% and 29% respectively during the same period.
There are two key factors to consider when investing in these funds. Firstly, they can be costly to hold, with BITX having an expense ratio of 1.9% and BITU charging 0.95%, translating to a significant annual fee for long-term investors.
Secondly, Bitcoin undergoes periods of significant fluctuations. While such downturns are challenging for Bitcoin holders, they can be even more detrimental for leveraged Bitcoin holders.
For instance, the TQQQ ETF experienced an 80% drop in 2022 when the Nasdaq 100 index fell by 32%.
