Volatility Shares, a U.S. exchange-traded fund (ETF) issuer, has listed six ETFs based on Cardano (ADA), Stellar (XLM) and Chainlink (LINK) on Cboe’s BZX Exchange in Chicago and other venues.
CoinPost, a blockchain media outlet, reported on April 3 that the listed products include 2 ETFs for each of the 3 assets. They consist of a 1x ETF that tracks the spot return of the underlying asset and an ETF that seeks twice the daily return. The tickers are CRDD and CRDX for Cardano, STLR and STLU for Stellar, and CHNL and CHNU for Chainlink.
Based on market data such as ETF.com, the total assets under management (AUM) of more than 14 ETFs run by Volatility Shares exceeded $3 billion as of March 30. In particular, AUM for the company’s flagship product, the BITX 2x bitcoin futures ETF, was about $960 million as of March 31, securing an overwhelming share and liquidity in the crypto leveraged ETF market.
Volatility Shares said its 2x leveraged ETFs are structured to meet a daily target return using derivatives such as futures and swaps. It said performance divergence may occur when held over the medium to long term due to compounding effects, and advised investors to monitor their holdings at least once a day. The company operates as an investment adviser registered with the U.S. Securities and Exchange Commission (SEC) and as a commodity pool operator (CPO) registered with the National Futures Association (NFA).
The listing is also seen as an example showing that altcoin-based products are gradually diversifying in the ETF market beyond bitcoin and ether. By offering assets with different characteristics, such as Cardano, Stellar and Chainlink, in an ETF structure at the same time, there is also an assessment that asset managers’ moves to absorb more segmented demand for crypto investment have become clearer.
Still, 2x leveraged products require caution because they bet on the direction of the underlying asset while significantly increasing volatility risk. In particular, because the structure is designed based on daily returns, long-term performance can differ from the return investors expect as market swings grow, and these products are interpreted as being more suitable for short-term strategy demand than long-term holding.
Separately, the SEC has maintained its stance of not allowing plans for 5x leveraged ETFs to take effect, citing risk management concerns under Rule 18f-4.
