Today, Global X added to its offering of bitcoin-related ETFs with the launch of the Global X Bitcoin Trend Strategy ETF (NYSE Arca: BTRN). The new fund tracks the CoinDesk Bitcoin Trend Indicator Futures Index, which allocates tactically to bitcoin futures and the Global X 1-3 Month T-Bill ETF (CLIP) based on market signals. Additionally, BTRN has an expense ratio of 0.95%.
“BTRN was designed to help navigate various market cycles by providing dynamic exposure to bitcoin futures based on bitcoin’s current price trend,” said Global X Head of Product Development Adam Sze. He added that the fund brings a “factor-based approach” to investing in bitcoin futures.
Additionally, he noted that the fund “seeks to capitalize on the shifts in market sentiment as part of a systematic and dynamic approach which may capture upside potential and minimize drawdowns relative to a bitcoin futures-only allocation.”
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Allocating to Bitcoin Futures Based on Trend
The prospectus for BTRN says that its underlying index relies on the CoinDesk Bitcoin Trend Indicator to determine the allocations. The metric comprises four exponential moving averages that capture bitcoin’s price trend. The methodology evaluates how many of those moving averages indicate an upward or downward trend in bitcoin’s price. From there, the process determines if there is a trend and – if there is one – its strength.
When a strong uptrend occurs in the performance of bitcoin, BTRN allocates its entire portfolio to futures on the cryptocurrency. That allocation drops to 75% with an unremarkable uptrend. The fund allocates fully to CLIP in the case of a strong downtrend. However, it signals the fund to invest 25% of its portfolio in the futures in instances of a standard downtrend. If there’s no trend, the portfolio splits its exposure evenly between the two assets, according to the prospectus.
“The [Bitcoin Trend Indicator] was designed to help investors navigate long-term bitcoin drawdowns, mitigating potential risks,” said CoinDesk Indices President Alan Campbell.
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