This is an actively managed ETF that applies an option income strategy to crypto-related assets in pursuit of high distributions. It sells options on its cryptocurrency exposure and aims to generate high distribution income from the premiums.

It suits risk-tolerant investors who want high distributions from crypto income and are willing to actively accept both the high volatility of cryptocurrencies and the risks of an options strategy.

It is an ETF run with an active management approach by Nicholas.

After securing cryptocurrency exposure such as Bitcoin, the fund sells call options, collects the option premiums, and distributes them. It pursues high distributions through option premiums, but its structure limits participation in upside when crypto surges because of the cap, and leaves it exposed to losses when crypto plunges.

• Combines cryptocurrency exposure with option income
• Pursues high weekly distributions

Assets under management (AUM) stand at $251.6M, and the total expense ratio is 0.99% per year.

The main point of comparison is a strategy that pursues distributions through option income, versus spot products that hold cryptocurrency directly.

Crypto option income depends on cryptocurrency prices and volatility. In sideways markets, option premiums generate high distributions, but when prices surge, participation is limited by the cap, and when prices plunge, the fund is exposed to losses. Crypto volatility has a major impact on the distribution level.

Fund flows into crypto income products diverge sharply depending on cryptocurrency prices and demand for high distribution income, and demand drawn by high distribution rates can also shift money into related product groups. It is also worth noting that distributions and net asset value can vary greatly depending on crypto prices and the options environment.

The very high distribution is both a strength and a risk, and NAV erosion, capped upside, and crypto volatility are considerations.

For exposure that combines stocks with gold and Bitcoin, direct substitutes include RSSX, and for exposure that blends the S&P 500 with Bitcoin, products such as BBB are also worth comparing. For exposure that blends the S&P 500 with Ethereum, products such as EEE can be considered as well. The three products shown in the table, RSSX, BBB, and EEE, mix cryptocurrency into an asset allocation, whereas this ETF pursues distributions through crypto option income, which is the key differentiator.

These are the points to review before investing in BLOX. The very high distribution is attractive, but NAV erosion, capped upside, and crypto volatility require advance checking. It is also wise to compare it with spot crypto and asset allocation products.

NAV erosion from crypto plunges and capped upside during surges are the main variables for performance, and a high distribution rate does not necessarily mean high total return. Because of its crypto option income structure, the fund can suffer large losses during crypto downturns.

It is a suitable candidate for risk-tolerant investors seeking high distributions from crypto income. To mix cryptocurrency into an asset allocation, consider products such as RSSX and BBB, and if you want crypto option income, it is advisable to choose this product only after fully understanding the risks.