First Trust Seeks SEC Approval for ‘Buffer ETF’ to Protect Investors from Bitcoin Volatility


Financial services firm First Trust recently submitted a filing to the US Securities and Exchange Commission (SEC) to launch a unique investment product – the First Trust Bitcoin Buffer ETF. This ETF is different from spot Bitcoin offerings, as it utilizes options to provide investors with a risk mitigation strategy.

Buffer ETFs have been gaining momentum, with 139 such funds currently trading on US markets and a total asset under management of $32.54 billion. BlackRock, a major player in the ETF space, introduced its iShares buffer ETFs earlier this year. These funds offer investors a specified level of downside protection while capping potential upside gains.

First Trust’s ETF is structured to participate in the positive price returns of the Grayscale Bitcoin Trust or other Bitcoin-related exchange-traded products (ETPs). It imposes a limit on potential losses during market drops. However, investors must understand that these funds do not guarantee complete protection and success in providing downside protection is not guaranteed.

Investors should carefully assess the suitability of buffer ETFs for their portfolios, as they may not be suitable for everyone. This filing signals a shift in the cryptocurrency investment landscape, with more innovative investment products coming to address market uncertainties.

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