New Bitcoin ETFs Unveil Protection and Income Strategies

What do you get when you combine bitcoin with some of the biggest trends in ETFs? 

It’s a brave new world for bitcoin-themed ETFs, a wave of new products that focus on income and outcomes rather than just exposure to the crypto asset or adjacent industries. One of the biggest names in the category, Grayscale, earlier this month launched two such products — a covered-call bitcoin ETF and a premium income ETF. Calamos this month launched another series of “protected” bitcoin ETFs that resemble buffered funds, following the debut of similar products in January. Two other issuers — Innovator and First Trust — have also brought protection-oriented bitcoin ETFs to market.

Investors and asset managers “like bitcoin, and they want to see what else it can do,” said Roxanna Islam, head of sector and industry research at TMX VettaFi. The new iteration of crypto ETFs “legitimizes bitcoin more and brings it further into the financial world.”

Bitcoin ETF 3.0

It’s been several years since bitcoin funds appeared in the US, with the first ones concentrating on bitcoin futures or bitcoin-adjacent businesses. Last year marked a monumental shift, with the first spot-price bitcoin ETFs being approved by the SEC. Demand is obviously there for the products with direct exposure — the biggest such fund, the iShares Bitcoin Trust ETF, represents about $48 billion in assets and has been recognized as the fastest-growing ETF ever. 

The Calamos strategies, which represent most of the protected category, come in three flavors: one with 100% protection against losses and an upside cap of about 11%; another with 90% downside protection and a roughly 29% cap; and one with an 80% floor and a nearly 52% ceiling. The trios of ETFs it added in January and April have approximately one-year outcome periods.

“Market volatility serves as a reminder of the importance of risk management and downside protection,” Calamos CEO John Koudounis said in an announcement of the April ETFs, adding that the products enable “investors to remain confidently invested while mitigating the potential of bitcoin drawdowns.”

Data from VettaFi show:

• The six covered-call or options income bitcoin ETFs represent $400 million.
• The eight structured or protection-oriented bitcoin ETFs account for $119 million.

Happy Medium? A deterrent for many investors is bitcoin’s notorious volatility. Of course, anyone paying even a little attention to the stock market today knows that dramatic fluctuations are hardly exclusive to crypto. Buffer and covered-call ETFs have been big sellers, raking in a combined $20 billion in sales in the first three months of 2025. Extending the strategy to bitcoin might just be a sweet spot for some asset managers. 

“The market is completely volatile,” Islam said. “It will be interesting to see the reception these April products get because of the different environment we are in.”