Wall Street Introduces Bitcoin And Gold To The ETF Market

Tidal Financial Group has filed to introduce a pair of exchange-traded funds (ETFs) that will allow investors to take long and short positions on Bitcoin and gold. Branded under the Battleshares label, these funds will offer exposure to both assets, allowing investors to capitalize on the performance of these alternative hedges in one product, Bloomberg reported.

Bitcoin, currently worth around $104,000, has emerged as one of the popular digital assets and a potential store of value. Bitcoin ETFs have seen billions of dollars in inflows this year, while gold ETFs have also seen substantial investment.

The new ETFs try to address the ongoing dispute over which asset is the most effective hedge against risks like inflation, currency depreciation, and geopolitical tensions. The U.S. Securities and Exchange Commission (SEC) filings state that the ETFs will employ a number of instruments, such as options, swaps, and short sales, to carry out long-short strategies on both assets.

According to Bloomberg, Bitcoin's rise, supported by growing institutional adoption, contrasts with gold's stable performance, which has been influenced by global uncertainty. While gold is frequently preferred during periods of geopolitical turmoil, Bitcoin is gaining popularity for its position in the growing digital finance ecosystem.

Dhaval Joshi, Chief Strategist at Counterpoint, told Bloomberg that Bitcoin and gold both fall under the category of "non-confiscatable" assets, offering protection against inflation and capital controls. He suggested that Bitcoin is likely to gradually take market share from gold, adding that a long Bitcoin/short gold position would likely perform well over time, while a short Bitcoin/long gold position could trend downward.

Battleshares, the firm behind the ETFs, has also launched other long-short strategies, including funds that pair positions in companies such as Tesla and Ford, and Coinbase and Wells Fargo. While the firm is still expanding its product range, its strategy focuses on creating a diversified suite of ETFs based on pair trading.

Despite the novelty of the new ETFs, some industry experts have raised concerns about the added complexity. Brent Donnelly, President of Spectra FX Solutions, pointed out to Bloomberg that many investors who are bullish on Bitcoin also share a similar positive outlook on gold. He believes that these ETFs introduce unnecessary complexity, as investors could already achieve similar exposure by pairing existing, low-cost ETFs like BlackRock's Bitcoin ETF or State Street's gold fund.

In addition to the continued demand for gold and the growing interest in digital assets shows the changing preferences of investors looking for strategies to safeguard their portfolios from international financial risks.