VistaShares launched the BTYB ETF, offering a hybrid product that aims for double the annual yield of the US Treasury bond, with 5-year terms, while providing exposure linked to Bitcoin price movements.
BTYB allocates approximately 80% of its assets to U.S. Treasury securities, Treasury futures, and Treasury-focused ETFs with target maturities of three to seven years, and approximately 20% of its treasury to securities that provide economic exposure to Bitcoin.
VistaShares describes the improved performance as resulting from an actively managed options overlay on the Treasury component. This means that the fund sells options to generate premiums that, together with coupon receipts, aim to deliver enhanced weekly payouts.
The fund does not directly own Bitcoin, nor does it purchase derivatives that directly track Bitcoin’s spot price. Instead, the 20% is referred to as Bitcoin because it invests in U.S.-listed companies with significant Bitcoin exposure—that is, miners or firms that hold Bitcoin—and implements a synthetic covered-call approach by selling call options on those equity positions.
What can be expected from this VistaShares innovation?
VistaShares also mentioned certain risks associated with this decision. For those who purchase the fund, they stated that it carries digital asset and digital asset market risk, derivatives and options risk, interest rate and fixed income risk, liquidity and turnover risk, and new fund risk.
Specifically, distributions are a target and not guaranteed; VistaShares warns that distributions may be classified as a return of capital (ROC), which reduces the net asset value (NAV).
Income for traders and institutional treasuries depends on consistent premium generation; a drop in implied volatility or a rapid reassessment of rates could compress options income and reduce distributions.
The synthetic Bitcoin sleeve will have a different beta and correlation to spot BTC than direct holdings, and selling calls on those holdings limits upside while exposing the fund to equity-specific and crypto-linked losses. Finally, the weekly distribution cadence changes cash management and tax timing considerations for allocators.
Income-focused managers or those seeking an alternative route to Bitcoin exposure will monitor BTYB’s early distribution cycles and realized volatility in both the Treasury and Equity tranches before adjusting allocations.
