Crypto Leverage ETFs: How They Work, Risks, and Emerging Trends
What Are Crypto Leverage ETFs?
Crypto leverage ETFs are specialized exchange-traded funds designed to amplify the daily returns of underlying cryptocurrency assets like Bitcoin, Ethereum, Solana, and XRP. These financial instruments utilize derivatives such as futures, swaps, and options to achieve leverage, offering exposure levels of 2x, 3x, or even 5x the daily performance of the tracked asset. While they present opportunities for significant gains, they also carry heightened risks, making them more suitable for short-term trading rather than long-term investment.
Unlike traditional ETFs, leveraged crypto ETFs reset their leverage daily. This daily reset mechanism introduces unique risks, such as volatility decay, which can erode…
