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Doubling Your Return On Bitcoin?
Just a week into 2018, NYSE has filed a request to SEC to launch several Bitcoin exchange-traded funds (ETFs). It intends to launch five different ‘bull' and 'bear’ futures contracts. Their value will be determined by the price of Bitcoin futures listed on other US exchange that trades bitcoin futures contracts such as the CME or the CBOE.
Are those new ETFs a good opportunity for you to make money with Bitcoin? Let's take a look at what's being launched.
They are three types and are categorized as 1.25X, 1.5X and 2X. Each offers percentage returns of 100, 150 and 200 percent respectively on the specific contract. The funds are not meant to be traded for more than a day.
The bull funds target daily leveraged ETF returns before fees, and other expenses are deducted. These should correlate positively to their respective percentage daily return, based on the target benchmark. When the target benchmark increases, the investors gain 100, 150 and 200 percent gains when the contract target is achieved.
The investors can also experience losses. This occurs when the target benchmark declines. Their value on that given day would decline by approximately 1.25, 1.5 or 2 times as applicable.
These funds allow investors to leverage against a loss when trading with bitcoins. There are two funds 1X and 2X which offer 100 and 200 percent gains should the daily leveraged target be met. Investors can also make losses here too.
If the value of the benchmark rises, Bear Fund investors will incur losses. The losses will be compounded either once or twice (1X or 2X) as applicable. However, should the benchmark decline, the investors stand to gain.
NYSE will become only the third US exchange for providing Bitcoin future contracts should their request be approved. Only CME and CBOE are currently trading futures. The number might increase once several ETFs and trading options have been tested and proven.