Hedgeye’s New Bitcoin ETF Filing Targets One Of BTC’s Biggest Problems

Hedgeye has filed for a “Hedged Bitcoin” ETF that would combine exposure to spot ETFs with an options overlay designed to reduce volatility and manage downside risk. Bloomberg ETF analyst James Seyffart flagged the filing on X, calling it a new attempt to package BTC exposure in a more defensive wrapper.

“WOAH — NEW: Hedgeye ‘Hedged Bitcoin’ ETF was just filed,” Seyffart wrote. He added that, according to the filing, the product would “hold spot Bitcoin ETFs and use options strategies to reduce vol and downside risk.”

The proposed fund is named the Hedgeye Hedged Bitcoin ETF and would trade under the ticker HBIT on NYSE Arca, Inc., according to the prospectus excerpt shared by Seyffart. The document remains preliminary, stating that the information “is not complete and may be changed,” and that the securities may not be sold until the registration statement filed with the Securities and Exchange Commission becomes effective.

Bitcoin Exposure With A Risk Overlay

The core structure is straightforward: the fund seeks Bitcoin exposure through ETPs and ETFs, while using options to dampen volatility and limit downside. The prospectus says the fund aims “to reduce volatility and manage downside risk through an options strategy that involves the purchase and/or sale of put and call options” based on Hedgeye Risk Management, LLC’s proprietary signals.

Those signals are described as “Risk Range” signals, which the filing says are used to develop market entry and exit points for investable assets. In practice, the ETF would not simply buy and hold Bitcoin-linked products. It would adjust its options positioning based on market conditions, implied volatility, Bitcoin price trends, liquidity, and other factors determined by the adviser.

“The Fund will utilize options on shares of Reference ETPs and/or on indexes or ETPs and ETFs that provide exposure to Bitcoin price movements,” the filing states. “The Fund’s options strategy is designed to reduce volatility and manage downside risk while maintaining exposure to the performance of Bitcoin through investments in ETPs and ETFs.”

That language puts HBIT in a growing category of crypto products aimed not at maximizing raw upside, but at changing the return profile of Bitcoin exposure. For allocators, the relevant pitch is not merely access to BTC, which is already available through spot ETFs, but a rules-based overlay intended to make that exposure more tolerable during drawdowns.

Downside Protection, But With A Trade-Off

The filing is explicit that the hedge comes with a cost. The fund’s option positions are “designed to provide downside protection,” but may also mean “frequently foregoing some upside potential.” That is the central trade-off in the strategy: investors may get a smoother ride in adverse markets, but they may also give up part of Bitcoin’s upside during strong advances.

“The premiums received from writing options are intended to provide income to offset the cost of buying options,” the filing says. The fund may buy and write both standardized exchange-traded options and Flexible Exchange Options, or FLEX Options, which are exchange-listed contracts with customizable terms such as strike price and expiration date.

The prospectus also notes that both standardized exchange-traded options and FLEX Options are guaranteed for settlement by the Options Clearing Corporation. FLEX Options differ from typical listed contracts because investors can customize certain key terms that are normally standardized.

At press time, BTC traded at $62,719.