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Wall Street giant Goldman Sachs is entering the cryptocurrency ETF race.
The investment banking titan has filed for a unique structured product that is specifically meant to cater to risk-averse and income-seeking investors.
The "boomber candy" strategy
According to newly surfaced SEC filings, Goldman Sachs is preparing to launch a "Bitcoin Premium Income" ETF.
Instead of offering a standard spot product, the firm is using a rather sophisticated derivatives strategy designed to offer clients exposure to Bitcoin's price action while dampening volatility and generating yield.
Bloomberg Senior ETF Analyst Eric Balchunas has opined that the product is essentially "boomer candy". This essentially means that th the product is designed for traditional clients who want exposure to the digital asset space but are happy to sacrifice some upside potential in exchange for lower downside risk.
The fund will not hold Bitcoin directly. Instead, it gains exposure by owning shares in existing Spot Bitcoin ETPs. The fund employs a dynamic "overwrite" options strategy to generate yield.
Investment banks are embracing Bitcoin
On Apr. 8, Morgan Stanley launched its own spot Bitcoin ETF (MSBT), triggering a fierce fee war among major asset managers.
Morgan Stanley priced the MSBT expense ratio at a rock-bottom 0.14%. The goal was to undercut Grayscale Bitcoin Mini Trust (0.15%) and BlackRock’s iShares Bitcoin Trust (0.25%).
The launch was a great success, with Morgan Stanley pulling off one of the most successful ETF debuts as of recently.