Calamos bets protected Bitcoin ETFs can outlast crypto market swings

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Calamos bets protected Bitcoin ETFs can outlast crypto market swings As more than $1 billion exited spot Bitcoin ETFs last week, Calamos says investors are rotating into Bitcoin products with built-in downside protection. Latest developments: Calamos says its protected Bitcoin ETFs are attracting inflows even as spot Bitcoin ETFs see redemptions. - Matt Kaufman, head of ETFs at Calamos, said the firm saw roughly $10 million to $15 million in inflows over the past several weeks. - Kaufman said advisors are increasingly looking for Bitcoin exposure that reduces volatility and downside risk. - The firm offers three versions of its protected Bitcoin ETFs, including products with full downside protection and others with 10% or 20% downside risk. - “You can get upside of Bitcoin with no downside risk,” Kaufman said. - Kaufman joined CoinDesk's Jennifer Sanasie on Public Keys. How it works: Calamos structures the products using Treasuries and options tied to Bitcoin-linked indexes. - Kaufman said the firm allocates roughly 90% of assets into Treasuries to build downside protection. - The remaining budget is used to buy Bitcoin-linked call spreads through FLEX options. - Calamos created its own Bitcoin-linked index and listed FLEX options tied to that index after the launch of spot Bitcoin ETF options. - The products are offered in quarterly structures as well as laddered versions designed for model portfolios. What advisors are asking: Wealth managers are becoming more sophisticated in how they evaluate crypto exposure. - Kaufman said advisors previously focused on whether Bitcoin belonged in portfolios at all. - Now, advisors are asking how to improve risk-adjusted returns and portfolio construction using crypto exposure. - Calamos positions its products as alternatives to traditional portfolio allocations, including broad equities, bonds and cash. - Kaufman said some investors are moving from cash-like products into fully protected Bitcoin ETFs tied to Bitcoin performance but without downside exposure. Reading between the lines: The crypto ETF market is evolving beyond simple spot exposure. - Kaufman said the industry is increasingly dividing crypto ETF strategies into three categories: protection, income and growth. - Calamos previously launched auto-callable income ETFs and is exploring additional crypto-related strategies. - Other ETF issuers have focused on generating yield from Bitcoin volatility through options-based products. - “You don’t just have to sit in the spot vehicle anymore and ride out those waves,” Kaufman said. What comes next: Calamos expects Bitcoin volatility to remain a defining feature of the asset. - Kaufman said he expects Bitcoin to revisit previous highs despite recent market turbulence. - He argued Bitcoin’s volatility profile creates opportunities for structured products and options-based strategies. - “I think we’re going higher,” Kaufman said.

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