When it comes to investing in bitcoin, part of the challenge is figuring out when the price has reached its peak — for now.
For the first half of July, bitcoin was on somewhat of a hot streak. The price of the asset keeps growing, and it reached a new high on July 14.
Oftentimes, good performance and new highs tend to send a pretty strong buy signal for investors. This is especially true when it comes to traditional assets, such as equities and commodities.
However, compared to other assets on the market, bitcoin tends to behave like an entirely different asset. In fact, much of bitcoin’s historical price performance is a tale of peaks and valleys. The cryptocurrency will hit or approach a new high and then potentially face a sharp downturn before the cycle begins again.
As such, it can be especially difficult for advisors to properly time their bitcoin investments. Has the digital asset already reached its peak for now, or is there still room to grow?
That said, timing one’s bitcoin allocations is not as perilous as it used to be. Now advisors can invest in flexible ETFs that blend bitcoin exposure with some degree of risk mitigation.
Building Risk-Off Bitcoin Exposure
In July, the Calamos Bitcoin 80 Series Structured Alt Protection ETF – July (CBTY) debuted. The fund offers return potential from bitcoin, paired with protection against downside loss.
To start, investors who pay fees and expenses for the fund get a barrier that limits maximum loss to 20% across a one-year outcome period. Given the frequency and intensity of bitcoin’s price swings, this barrier can help severely limit loss of principal across each outcome period.
Meanwhile, the fund still can generate strong capital appreciation from bitcoin’s price movements. Even though the ETF has a return cap, it launched with an upside cap of 41.05%.
This cap rate may be higher than what investors would expect from a defined outcome ETF. Better yet, it gives the fund a long runway to grow as bitcoin approaches new peaks down the line.
Ultimately, CBTY lets advisors take a chance on bitcoin regardless of whether or not the cryptocurrency is approaching a new high. When the getting’s good, the fund may provide upside from bitcoin’s price movements. Inversely, if the price of bitcoin plunges, CBTY’s downside barrier significantly limits the risk exposure of one’s initial investment.
For more news, information, and strategy, visit the Crypto Content Hub.
Before investing, carefully consider a Fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
The Funds seek to provide investment results that, before taking fees and expenses into account, track the positive price return of the CME CF Bitcoin Reference Rate – New York Variant (“BRRNY”) (“Spot bitcoin”) up to a predetermined upside cap (the “Cap”) while seeking to protect against 100%, 90% or 80%, respectively, of losses (before total fund operating fees and expenses) of Spot bitcoin over a period of approximately one (1) year (the “Outcome Period”). The Funds will not invest directly in bitcoin. Instead, the Funds seek to provide investment results that, before taking total fund operating fees and expenses into account, track the positive price return of Spot bitcoin by investing in options that reference the price performance of one or more underlying exchange-traded products (“Underlying ETPs”) which, in turn, own bitcoin and/or one or more indexes that are designed to track the price of bitcoin (“Bitcoin Index”).
The Target Outcome may not be achieved, and investors may lose some or all of their money. The Funds are designed to achieve the Target Outcome only if an investor buys on the first day of the Outcome Period and holds a Fund until the end of the Outcome Period. While the Funds seek to provide 100%, 90% or 80% protection against losses experienced by the price of Spot bitcoin for shareholders who hold Fund Shares for an entire Outcome Period, there is no guarantee a Fund will successfully do so. If a Fund’s NAV has increased significantly, a shareholder that purchases Fund Shares after the first day of an Outcome Period could lose their entire investment. An investment in the Funds is only appropriate for shareholders willing to bear those losses. There is no guarantee the Capital Protection and Cap will be successful, and a shareholder investing at the beginning of an Outcome Period could also lose their entire investment.
An investment in the Funds is subject to risks, and you could lose money on your investment in a Fund.
There can be no assurance that a Fund will achieve its investment objective. Your investment in a Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in a Fund can increase during times of significant market volatility. The Funds also have specific principal risks, which are described below. More detailed information regarding these risks can be found in the Funds’ prospectus.
Investing involves risks. Loss of principal is possible. The Funds face numerous market trading risks, including authorized participation concentration risk, underlying ETP risk, cap change risk, capital protection risk, capped upside risk, cash holdings risk, concentration risk, clearing member default risk, correlation risk, costs of buying and selling fund shares, counterparty risk, derivatives risk, equity securities risk, FLEX options risk, interest rate risk, investment in a subsidiary, investment timing risk, liquidity risk, management risk, market maker risk, market risk, new fund risk, non-diversification risk, options risk, OTC options risk, position limits risk, premium-discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, U.S. Government security risk, U.S. Treasury risk, and valuation risk. For a detailed list of Fund risks see the prospectus.
Digital Assets Risk: The Bitcoin network was first launched in 2009 and bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Although the Bitcoin network is the most established digital asset network, the Bitcoin network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. Moreover, because digital assets, including bitcoin, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this prospectus. Digital assets represent a new and rapidly evolving industry, and the value of the Underlying ETPs’ shares depends on the acceptance of bitcoin. The realization of one or more of the following risks could materially adversely affect the value of the Underlying ETPs’ shares.
100%, 90% or 80% capital protection is over a one-year period before fees and expenses. All caps are predetermined.
Cap Rate – Maximum percentage return an investor can achieve from an investment in a Fund if held over the Outcome Period.
Protection Level – Amount of protection a Fund is designed to achieve over the Days Remaining.
Outcome Period – Number of days in the Outcome Period.
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