Cboe Pushes for 3x Crypto ETFs as 2x Funds Lose Up to 96%
Cboe wants to list triple-leveraged Bitcoin and Ethereum funds despite catastrophic performance from existing 2x products.
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Key takeaways
- Cboe has submitted proposals for 3x leveraged Bitcoin and Ethereum ETFs, which remain pending regulatory approval.
- Existing double-leveraged crypto products have suffered devastating losses.
- The ETHU fund's sponsor reported an average annualized NAV loss of 96.15% through June 30.
Cboe wants 3x leveraged Bitcoin and Ethereum ETFs on public exchanges. The exchange's proposal is still pending, but the timing ought to raise eyebrows on any trading desk.
Existing double-leveraged products are already gutting balances. Look at ETHU, a 2x leveraged Ethereum fund. Its sponsor posted an average annualized net asset value (NAV) return of -96.15% through June 30. That's practically a complete destruction of capital.
The mechanic is simple: leveraged ETFs reset exposure every single day. In volatile markets, that daily rebalance creates relentless mathematical drag. A 3x fund amplifies that math, compounding gains and losses at triple the rate of underlying spot prices.
Why it matters
Nobody should buy and hold a leveraged ETF. Still, retail traders park money in them for too long, walking straight into volatility decay. If regulators approve Cboe's 3x funds, that extreme downside risk moves into standard brokerage accounts. High leverage brings quick wins. In crypto, it mostly brings total destruction.
Source: CryptoSlate
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Mia Chen
Mia digs into DeFi and on-chain data, translating protocol mechanics into plain English for everyday readers.
