Innovative ETF Strategy
Tidal Trust II has submitted regulatory paperwork proposing an exchange-traded fund that would exclusively hold Bitcoin during non-market hours. The Nicholas Bitcoin and Treasuries AfterDark ETF is designed to purchase exposure at the close of U.S. markets and exit these positions shortly after opening.
The Securities and Exchange Commission (SEC) filing outlines a strategy that would utilize Bitcoin futures during overnight hours. Positions would be closed after U.S. markets commence each trading day. When employing Bitcoin underlying funds, the ETF would acquire securities at market close and sell them around market open, aiming to capture price movements that occur during off-hours periods.
During daytime trading hours, the assets within the ETF would rotate into U.S. Treasuries, money market funds, and cash equivalents. This approach is intended to harvest potential gains while mitigating exposure to intraday volatility through indirect Bitcoin investments.
Expert Analysis on Overnight Gains
ETF analyst Eric Balchunas commented on the proposal, noting that research indicates a significant portion of Bitcoin's gains typically occur after traditional market hours. He clarified that this observation does not diminish the potential impact of an ETF strategy, explaining that positioning in such a fund would relate to ETF activity and derivatives influenced by fund flows.
Balchunas suggested that a product specifically focused on after-hours trading could potentially achieve superior returns by concentrating on overnight price movements. This strategy represents a novel attempt to isolate and capitalize on a specific pattern observed in Bitcoin trading behavior.
Regulatory Landscape and ETF Offerings
The Form N-1A registration statement filed by Tidal Trust II adds two new Nicholas Wealth Management products to the trust's existing fund lineup. It is important to note that SEC approval for this ETF is not guaranteed and the filing remains subject to potential modifications.
Regulators have previously approved a variety of crypto-linked investment vehicles. These include ETFs based on Bitcoin and Ethereum futures, spot digital asset ETFs, and staked crypto products. The AfterDark concept introduces a temporal dimension to the design of ETF strategies.
Recent Trends in Bitcoin ETFs
In a separate development, November saw record outflows from spot Bitcoin ETFs listed on U.S. exchanges, with approximately $4 billion in withdrawals. The largest products by assets, BlackRock's iShares Bitcoin Trust and Fidelity's Wise Origin Bitcoin Fund, were among those leading these redemptions.