By Gordon Gottsegen
Bitcoin has dropped as much as 35% from its October high
Triple leverage and elevated volatility around bitcoin could be a dangerous combination.
Bitcoin is having a bad week on top of a rough month: The benchmark cryptocurrency is currently down more than 33% from its October all-time high of $126,272.76, wiping out more than $1.2 trillion in market cap.
If you somehow foresaw this huge drop in the price of bitcoin (BTCUSD) and took out a bearish position, you could’ve made a lot of money on your trade. If you guessed incorrectly, you would’ve lost a lot. However, thanks to a new leveraged financial product, traders will be able to up the ante on bitcoin’s swings – either multiplying their money, or potentially losing everything.
Exchange-traded-fund analyst Eric Balchunas posted on X that he spotted listings for new triple-leveraged bitcoin and ether (ETHUSD) ETFs, meaning that traders would be able to triple their exposure to the upside or downside for both cryptocurrencies, depending on which product they trade.
According to Balchunas, these are the first tripled-leverage bitcoin and ether ETFs to launch, and are coming to European markets next week.
Leveraged ETFs have been growing in popularity recently, with ETF providers filing for triple- and even quintuple-leveraged ETFs in the U.S. These products offer traders the ability to multiply earnings on daily price swings, but they also risk taking heavy losses if the underlying asset swings too far in the wrong direction.
“These leveraged products, not only in crypto but stocks also, are nothing more than gambling instruments. The SEC needs to fulfill their duty of investor protection and limit them. What’s to stop issuers from going 5x, 10x or 100x?” Joe Saluzzi, co-head of equity trading at Themis Trading, told MarketWatch.
Leveraged ETFs bring even more risk to volatile assets like crypto. There have been days in the past where specific crypto tokens have more than doubled, or bear markets where they’ve dropped by half. All it takes is a 33% move in the wrong direction for someone trading a triple-leveraged ETF to lose their money.
“If it’s tracking correctly, you’d be down 99%. … You will basically be wiped out,” Todd Sohn, ETF strategist at Strategas Asset Management, told MarketWatch. “The odds of that happening when you are playing with more volatile instruments has clearly increased.”
Some investors in Europe learned this lesson the hard way last month. On Oct. 6, the GraniteShares 3x Short AMD Daily exchange-traded product was terminated by its issuer after shares of Advanced Micro Devices Inc. (AMD) rose by more than 33% intraday. This product was an inverse fund; such funds climb when the price of the underlying asset falls, and decline when the price of the underlying asset rises. So, the 33% intraday swing in AMD shares drove the value of the exchange-traded product to zero.
Although the triple-leveraged bitcoin and ether ETFs would be the first in the market, investors in the U.S. already have access to double-leveraged ETFs like 2x Bitcoin Strategy ETF BITX, ProShares Ultra Bitcoin ETF BITU and T-Rex 2X Long Bitcoin Daily Target ETF BTCL. And on a week like this one, when bitcoin is falling, those ETFs fall even more: All three of them have lost more than 20% this week.
Most of these leveraged financial products are intended to be held for short durations. According to filings for the products, the advertised leverage only applies to daily moves, meaning holding them for longer periods can cause returns to deviate meaningfully from what one might expect. Over the long term, some of these funds have even underperformed their underlying stocks or assets.
Leveraged ETFs appeal to a specific kind of trader with a very high tolerance for risk. But not everyone who comes across these products may know that. That’s why Sohn said it’s important for traders to “know the ingredients” of leveraged ETFs before trading them, adding that investors should only trade what they’re willing to lose.
“If you are betting – trading, whatever you want to call it – on a levered product and you get wiped out, make sure it’s not going to ruin your life,” Sohn said.
-Gordon Gottsegen
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11-21-25 1559ET
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