July 21, 2024
Korean Investors Flock to Turbocharged Bitcoin ETF, Surpassing TSMC's Popularity
Bitcoin ETF

Korean Investors Flock to Turbocharged Bitcoin ETF, Surpassing TSMC’s Popularity

As interest in cryptocurrency investments continues to surge, Korean investors are increasingly drawn to a high-risk exchange-traded fund (ETF) in the United States.

The VolatilityShares’ 2X Bitcoin Strategy ETF, known by its ticker BITX, aims to deliver twice the daily performance of short-term CME Bitcoin futures, presenting an opportunity for exceptionally high returns but also carrying inherent risks.

Strong Demand from Korean Investors

BITX has garnered significant attention in South Korea, with investors pouring a net $122 million into the ETF in March alone.

This surge in demand has propelled BITX to become the fifth-most bought foreign security in South Korea for the month, surpassing even popular investments like Tesla and American depositary receipts for semiconductor maker TSMC.

The appeal of BITX lies in its leverage compounding, which promises amplified returns. However, this strategy is not without its drawbacks, as it also suffers from “volatility drag,” which can erode returns over the long term.

Korean investors view BITX as a substitute for Bitcoin spot ETFs, which are currently unavailable in the country. The rising prices of Bitcoin have further fueled demand for such alternative investment avenues.

Source: Korea Securities Depository

Massive Inflows and Record Assets Under Management

Since the launch of US spot Bitcoin ETFs in January, BITX has experienced unprecedented demand, attracting $834 million in inflows in March alone.

Its assets under management reached a record high of $1.47 billion on Monday, coinciding with a resurgence in Bitcoin prices following a recent correction.

Despite its popularity, experts caution that BITX is designed for aggressive traders comfortable with high levels of volatility. Daily re-balancing and the volatile nature of Bitcoin pose significant risks, potentially leading to losses over time.

Growing Interest Sparks Competition

The success of BITX has spurred competition in the market, with other ETF issuers rushing to introduce their own leveraged Bitcoin ETFs.

Valkyrie’s BTFX has already launched, while ProShares, Direxion, and T-Rex have filed with the US Securities and Exchange Commission for similar offerings.

As cryptocurrency investments continue to evolve, leveraged ETFs like BITX offer investors the potential for amplified returns but come with heightened risks.

With growing interest and competition in this space, investors must exercise caution and thoroughly assess the risks before diving into such high-risk investment vehicles.

Image: Wallpaperflare.com

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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