U.S. asset managers are planning to launch Bitcoin exchange-traded funds (ETFs) that utilize derivatives to reduce the price volatility of digital assets.
This initiative aims to make cryptocurrency more appealing to risk-averse investors.
According to a report by Financial Times on Monday, December 2, leading firms like Calamos Investments, First Trust Portfolios, Innovator ETFs, and Grayscale Investments have submitted proposals to the U.S. SEC. These ETFs aim to use strategies such as “buffered” and “managed floor” mechanisms to shield investors from substantial losses, up to 30%, while capping potential profits.
The proposals also include variations such as covered call ETFs and leveraged strategies, broadening options for investors seeking a balance between risk and reward. “Given the meteoric rise in bitcoin this year, many investors are likely regretting they missed out because they were nervous about the volatility of the cryptocurrency,” explained Todd Rosenbluth, head of research at TMX VettaFi, a consultancy.
“These pending downside protection ETFs will allow more people to add bitcoin exposure to their portfolios in a risk-aware manner.”
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Innovator ETFs’ Chief Investment Officer Graham Day highlighted that the extreme losses Bitcoin sometimes experiences—up to 70% in a single quarter—have long deterred financial advisers. These new ETFs, Day argues, could “smooth out” the risks, making Bitcoin more palatable for mainstream investment portfolios.
If the SEC approves, the first of these ETFs could debut as early as February 2024. However, the report cautioned that challenges such as position limits on options contracts might arise if demand exceeds capacity.
Meanwhile, Bitwise Asset Management, a leading crypto asset manager overseeing over $11 billion in client assets, is making strides to broaden its cryptocurrency investment options. The firm has filed a proposal with the SEC for a new exchange-traded product (ETP) that combines direct exposure to spot Bitcoin and Ether, the two largest cryptocurrencies by market capitalization.
Bitcoin Options infrastructure has also expanded
The growth of these products has been supported by an expansion of regulated Bitcoin derivatives markets. In May 2026, the SEC approved Nasdaq’s proposal to list and trade Bitcoin Index Options, giving investors another regulated venue for managing Bitcoin exposure through options.
Exchanges have also increased position limits for options on major spot Bitcoin ETFs, including IBIT. The SEC approved changes to position and exercise limits on IBIT options at both BOX and Nasdaq PHLX during May 2026.
Cboe has also continued developing its Bitcoin ETF options market, with the SEC publishing changes to transaction fees for its Bitcoin U.S. ETF Index Options in June 2026. Together, these developments give asset managers a much deeper derivatives market to build sophisticated Bitcoin ETFs around.
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