The new exchange-traded fund launched by XFUNDS offers investors a combination of Bitcoin and short-term US Treasury bonds. Nicholas Bitcoin and Treasuries AfterDark ETF follows a different model, directing its investment strategy towards Bitcoin after US markets close and towards cash and government bonds when the session begins.
New approach to Bitcoin and bond balance in NGHT fund
The fund, launched under the code NGHT, indirectly invests in Bitcoin after the closing of transactions in the US markets. When the market reopens the next day, the assets in the fund are converted back into cash and government bonds. This model aims to evaluate the return potential arising from the fact that Bitcoin generally has more intense activity in the evening and night hours.
David Nicholas, CEO of XFUNDS, explained the fund’s strategy as follows:
Bitcoin is traded every day of the week and every hour of the day; price dynamics are now increasingly evident during market hours outside the US.
It is stated that the fund is systematically trying to isolate “Bitcoin’s overnight return”. Looking at previous periods, it is emphasized that the highest returns in Bitcoin were seen at night. The NGHT fund aims to maintain only cash and Treasury bond positions during these hours, against the tendency to move with US stocks during the day.
Competition is increasing in spot Bitcoin ETFs
With the launch of the NGHT fund, competition in spot Bitcoin ETFs has become even more intense. The spot Bitcoin ETF named MSBT, launched by Morgan Stanley on the same day, was offered to investors at a lower cost compared to the products offered by BlackRock and Grayscale, the major players in the sector, with a management fee of 0.14 percent.
Morgan Stanley, as one of the leading financial institutions in the USA, serves trillions of dollars of customers with approximately 16 thousand advisors. Therefore, the bank’s Bitcoin ETF is seen as a significant participant in the market.
According to Bloomberg ETF analyst Eric Balchunas, known for his fund analysis, MSBT is likely to reach $5 billion in assets under management in its first year. It is estimated that a transaction volume of 30 million dollars will be reached on the first day of the launch.
Recently, investor interest in spot Bitcoin ETFs has increased again. After a period of high outflows, a net inflow of $471 million was recorded in US-listed funds last Monday. This figure marked the highest daily entry in the last six weeks. In particular, BlackRock’s iShares Bitcoin Trust and Fidelity’s FBTC funds led the movement.
