What is Leveraged ETF
An index fund that leverages ETFs (Exchange Traded Fund) to anchor changes in the price of digital currencies. It is a mature trading product that tracks a certain multiple of the daily returns on the underlying asset. If the price of the underlying asset increases by 1%, the corresponding 3X leveraged ETF will increase by 3%; while the corresponding -1X and -2X products will decrease by 1% and 2%.
What is the nature of Leveraged ETF
Investors choose leveraged ETF related products based on their market sentiments and it shall be managed by the fund manager of leveraged ETF.
The leveraged ETF is essentially a unit share corresponding to a fixed leverage base, and there will be base management to ensure a fixed multiple of asset returns for anchored returns (such as BTC) to help investors through trading ETF product shares to obtain a specified multiple of the return on the underlying asset.
When the volatility of the underlying asset (such as BTC) in the opposite direction exceeds a set threshold, the fund manager will apply the rebalancing mechanism to adjust the fund position to ensure that net value loss of the fund does not exceed a certain limit.
In short: Investors buy leveraged ETF products based on their judgment of the market, and fund management to make risk control measures based on real-time market conditions so that ETF investors can be relieved of concerns about liquidation and obtain the leverage multiples of the underlying asset.
The naming rules of Leveraged ETF
BTC3L stands for 3x leverage long for BTC, while BTC3S stands for 3x leverage short for BTC.
Disclaimer: Leveraged ETFs are emerging financial derivatives, and the above contents do not constitute any investment advice. Please ensure to take proper risk control measures as leveraged ETFs may significantly reduce the risk of liquidation, but in extreme situations, there may still be risk of asset loss and liquidation so please take note and understand the difference between net value and price to avoid any losses.