Calamos is confident that protecting Bitcoin ETFs can outlast cryptocurrency market fluctuations

Latest developments: Calamos says protected Bitcoin ETFs are attracting inflows while spot Bitcoin ETFs are being redeemed.

• Matt Kaufman, head of ETFs at Calamos, said the company has seen about $10 million to $15 million of inflows over the past few weeks.
• Kaufman said advisors are increasingly looking for Bitcoin exposure that reduces volatility and downside risk.
• The company offers three versions of its protected Bitcoin ETF, including one with full downside protection and another with 10% or 20% downside risk.
• “You can get the upside of Bitcoin without the downside risk,” Kaufman said.
• Kaufman joins CoinDesk’s Jennifer Sanasie in the public keys division.

How it works: Calamos constructs its products using government bonds and options linked to a Bitcoin-linked index.

• Kaufman said the company has allocated about 90% of its assets to government bonds to build downside protection.
• The remaining budget will be used to purchase Bitcoin-linked call spreads through FLEX options.
• Calamos created its own Bitcoin-linked index and listed FLEX options linked to that index following the launch of its spot Bitcoin ETF options.
• The product is available in ladder versions designed for quarterly structures and model portfolios.

Advisors require: Asset managers are becoming more sophisticated in how they assess their cryptocurrency exposure.

• Kaufman said advisors had previously focused on whether Bitcoin belonged in their portfolios.
• Advisors are now asking how they can use cryptocurrency exposure to improve risk-adjusted returns and portfolio composition.
• Calamos positions its products as an alternative to traditional portfolio allocations, including a broad range of stocks, bonds and cash.
• Kaufman said some investors are switching from cash-like instruments to Bitcoin ETFs, which are tied to Bitcoin performance but are fully protected without the downside exposure.

Read between the lines: The cryptocurrency ETF market is evolving beyond simple spot exposure.

• Kaufman said the industry is increasingly dividing cryptocurrency ETF strategies into three categories: protection, income and growth.
• Calamos previously launched an auto-callable income ETF and is exploring additional cryptocurrency-related strategies.
• Other ETF issuers have focused on monetizing Bitcoin volatility through options-based products.
• “You no longer have to sit in your field vehicle and ride the waves,” Kaufman said.

Next steps: Calamos expects Bitcoin volatility to remain a defining characteristic of the asset.

• Kaufman said he expects Bitcoin to regain its previous highs despite recent market turmoil.
• He argued that Bitcoin’s volatility profile creates opportunities for structured products and options-based strategies.
• “I think we’re going to go higher,” Kaufman said.