The U.S. Securities and Exchange Commission has approved a rule change by Cboe BZX allowing the listing of six 3x leveraged ETPs, including one tied to Bitcoin and another to Ether. Volatility Shares’ products will seek to deliver three times the daily performance of their respective reference assets. The Bitcoin 3x ETF will trade under the ticker BITH, while the Ether 3x ETF will use ETHK. One final step is still required before they can officially launch.
Bitcoin moves from spot exposure to 3x leverage
The October 2 decision covers six products: Bitcoin, Ether, gold, silver, crude oil and natural gas. All belong to Volatility Shares’ VS Trust and will be eligible for listing on Cboe BZX under its rules for Commodity-Based Trust Shares.
Wall Street had already largely normalized exposure to Bitcoin. BlackRock’s IBIT ETF has even outperformed the Vanguard S&P 500 since its launch. Volatility Shares is now taking that logic much further.
Its BITH product targets three times Bitcoin’s daily performance, before fees and expenses. A 5% rise in the benchmark during one trading session would therefore target roughly a 15% gain. A 5% decline would theoretically imply a loss of about 15%.
There is an important distinction: BITH will not buy bitcoin directly. The fund will primarily use BTC-linked instruments, including Bitcoin futures contracts, together with cash that will serve, among other purposes, as collateral. ETHK will operate on broadly the same basis using Ether derivatives.
The product is therefore closer to a high-leverage trading tool than to a spot Bitcoin ETF designed simply to maintain exposure to BTC.
The 3x target applies only to a single day
This is probably the most important point to understand about the new products.
A 3x ETF does not promise three times Bitcoin’s performance over a month or a year. It targets three times its daily move, then resets its exposure. The compounding effect can therefore produce a very different result over several trading sessions.
Consider two hypothetical days. Bitcoin gains 10%, then loses 10%. An asset that started at 100 ends at 99. The 3x product would theoretically rise 30%, then fall 30%. Its initial 100 would first become 130, then just 91.
Bitcoin loses 1%.
The 3x product loses 9%.
That is why the prospectus warns that severe volatility can lead to substantial losses, potentially approaching the entire investment. Volatility Shares also notes that a sufficiently large daily decline in Bitcoin could theoretically destroy most of the product’s value.
This complexity contrasts with the much simpler products already available to retail investors. In the United Kingdom, for example, Hargreaves Lansdown has just made nine Bitcoin and Ether ETNs available to its two million clients.
BITH and ETHK are clearly designed for a different use case.
The SEC has given the green light, but not the launch signal
Eric Balchunas, a Bloomberg ETF analyst, described the decision as a major victory for Volatility Shares. Less than three years ago, the U.S. debate was still focused on approving a basic spot Bitcoin ETF. The market is now discussing products capable of multiplying its daily move by three.
The SEC did approve Cboe BZX’s rule change on October 2. It had received the application on August 10 and published it for comment on August 19. No comments were received.
That does not mean BITH and ETHK are immediately available.
The VS Trust’s Form S-1 remains a preliminary prospectus. It explicitly states that the securities cannot be sold until the registration statement becomes effective. No definitive launch date has yet appeared in the filing reviewed.
Volatility Shares already has experience in this area with BITX and ETHU, its 2x leveraged products. The new generation simply increases the leverage—and therefore the risk.
The development comes as asset managers are already expanding the range of structures built around BTC. Franklin Templeton, for example, is preparing ETFs that use dividends from U.S. stocks to increase Bitcoin exposure.
Wall Street is therefore no longer merely incorporating Bitcoin. It is beginning to build around it the full range of tools once reserved for major commodities and stock-market indexes.
The 3x product is probably the most aggressive expression of that trend so far.
