In brief
- Volatility Shares debuted leveraged ETFs for Cardano, Stellar, and Chainlink.
- The offerings dovetail with others offered by the firm that established the first leveraged crypto ETF in the U.S. in 2023.
- Volatility Shares filed for 3x and 5x leveraged ETFs last year, which covered cryptocurrencies and firms like Coinbase.
Volatility Shares debuted three exchange-traded funds that amplify price swings for cryptocurrencies on Wednesday, adding to the growing list of vehicles enabling traders to speculate on the digital assets with leverage.
The ETFs offer 2x exposure to Cardano, Stellar, and Chainlink, representing some of the largest altcoins in the cryptocurrency market. Their respective market caps clock in at $9 billion, $6.3 billion, and $5.6 billion, as of Wednesday afternoon, according to CoinGecko.
In addition to the 2x ETFs, Volatility Shares debuted funds that offer traditional exposure to futures for Cardano, Stellar, and Chainlink. Previously, Volatility Shares moved to establish 2x ETFs for Bitcoin, Ethereum, Solana, and $XRP.
Leveraged ETFs have become increasingly popular in recent years, amplifying daily returns for traders using financial derivatives and debt. In 2023, Volatility Shares debuted the first leveraged crypto ETF in the U.S., which tracks Bitcoin futures.
Since Volatility Shares’ 2x Bitcoin Strategy ETF (BITX) debuted, the product has seen notable adoption. On average, around 13 million BITX shares change hands each day, according to ETF Database. That’s twice the average daily trading volume of the Fidelity Wise Origin Bitcoin Fund (FBTC), a product from a legacy financial institution that tracks Bitcoin’s spot price.
“The debut of these six ETFs marks a strategic shift from broad market exposure toward granular asset exposure,” Sunny Sun, a marketing analyst at Volatility Shares, told Decrypt. “The target demographic for these ETFs consists of sophisticated traders seeking targeted exposure to specific digital asset ecosystems.”
In early 2024, the debut of spot Bitcoin ETFs represented a landmark moment for the digital assets industry, creating connective tissue between the cryptosphere and Wall Street. Bitcoin ETFs allow investors to gain exposure to the digital asset without buying and storing Bitcoin directly. Over time, they have emerged as a go-to tool among institutions for gaining exposure to the asset class.
Since U.S. President Donald Trump’s second term began, issuers have offered leveraged crypto ETFs for digital assets including Solana, $XRP, and Dogecoin amid a more favorable regulatory environment. Still, the SEC has signaled that it has its limits.
In a group call earlier this month, the SEC asked ETF issuers not to bring products to market offering 5x exposure to assets and indexes, including cryptocurrencies, per Bloomberg. Late last year, the watchdog also sent warning letters to issuers interested in 3x leveraged funds, expressing concern regarding how they measured associated risks.
Months before, Volatility Shares filed for 27 products offering 3x and 5x exposure. Those applications covered crypto and related stocks, such as Coinbase and Strategy.
