A new bitcoin exchange-traded fund (ETF) has been launched in Europe, featuring a unique characteristic.
Initiated by HANetf, a prominent $9.2 billion ETF provider, the Arrow Bitcoin EUR Hedged ETF offers European investors a means to gain exposure to bitcoin while mitigating the effects of fluctuations between the euro and the US dollar.
Given that bitcoin is denominated in US dollars, European investors who opt for an unhedged product face dual exposure: one to the movements in bitcoin pricing, and another to the performance of the dollar relative to the euro.
JUST IN: $9.2 billion ETF provider HANetf launches the first ever euro-hedged Bitcoin exchange traded commodity
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This newly established exchange-traded commodity aims to alleviate the currency exposure challenge, making it a product that is heralded by HANetf as a groundbreaking first in the marketplace.
Hector McNeil, co-founder and co-CEO of HANetf, stated, “With this launch, we are bringing the established logic of euro-hedged ETFs to the crypto market. Investors have long understood that currency movements can significantly affect returns across different asset classes, such as gold.”
He further elaborated, “Similar to gold, bitcoin is priced in US dollars, implying that European investors may simultaneously hold two perspectives: one on bitcoin itself and another on the dollar.”
HSBC is tasked with providing the currency hedging for this product. Typically, euro-hedged funds operate by having a bank engage in forward contracts to sell an equivalent dollar amount for euros at a predetermined fixed rate on a future date.
Should the dollar depreciate against the euro, any loss in the euro value of bitcoin is counterbalanced by a gain from the forward contract, and vice versa. These contracts are generally rolled over on a monthly basis, with the hedge being resized accordingly.
In the United States, bitcoin ETFs have experienced remarkable success since receiving approval from the Securities and Exchange Commission in 2024.
Managed by esteemed firms such as BlackRock, Fidelity, and Morgan Stanley, these products afford investors the capability to purchase shares reflecting the price of bitcoin without the complexities of direct cryptocurrency storage.
According to Coinglass, these funds now manage a cumulative total of $111.1 billion in assets, marking the most successful launch in the history of ETFs.
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