Investment firm Tuttle Capital Management is proposing to launch the first leveraged cryptocurrency exchange-traded funds (ETFs).
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Tuttle Capital has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to develop 2x leveraged crypto ETFs, including ones that would track the Donald and Melania Trump memecoins. Under the proposal, the daily returns of several different cryptocurrencies will be tracked and generated through swaps, call options, and direct investments.
Tuttle says it wants to launch ETFs tracking 200% returns of the following crypto: Chainlink (LINK), Cardano (ADA), Polkadot (DOT), XRP (XRP), Solana (SOL), Litecoin (LTC), as well as Bonk and the Melania and Donald Trump coins.
Risk vs. Reward
While the gains achieved through the leveraged crypto ETFs would be higher, investors risk losing their entire capital should prices drop significantly. “Using leverage amplifies returns but also magnifies losses, with investors potentially losing their entire principal within a single trading day if the underlying asset’s value drops by more than 50%,” warns Tuttle Capital in its SEC application.
While 50% drops are rare with stocks, crypto altcoins and memecoins are known for sudden declines of 10% or more. A 10% drop would mean the ETFs decline at least 20%, says Tuttle. Should the proposed crypto ETFs be approved by the SEC, they could be available to investors by April of this year.
Is SOL a Buy?
Most analysts don’t offer ratings or price targets on cryptocurrencies. So instead, we’ll look at the three-month performance of Solana, one of the cryptocurrencies that Tuttle Capital is targeting for a leveraged ETF. As one can see in the chart below, the price of SOL has gained 32% over the last three months.
