First Trust, a prominent provider of exchange-traded products (ETPs) in the US, has introduced its first Bitcoin Buffer ETF. This novel type of ETP aims to safeguard crypto investors from substantial losses in the volatile cryptocurrency market.
The Bitcoin Buffer ETF is designed to track the performance of an underlying ETP that invests in Bitcoin futures contracts, providing exposure to Bitcoin without direct ownership or custody of the cryptocurrency. The key feature of the Bitcoin Buffer ETF is its ability to provide a buffer against significant price declines in Bitcoin. The fund is structured to protect up to 30% of its losses at the end of each target outcome period.
First Trust, with over $128 billion in assets under management as of 2023, is a major player in the ETP space in North America, offering a diverse range of ETPs across various asset classes, sectors, regions, and strategies.
The launch of such Bitcoin-focused ETPs comes amid increasing anticipation in the industry for regulatory approval of Bitcoin exchange-traded funds (ETFs). The move by First Trust follows a trend initiated by other major firms like BlackRock, Fidelity Investments, WisdomTree, Valkyrie, VanEck, and Invesco, which have all submitted applications to the Securities and Exchange Commission (SEC) for Bitcoin ETFs.