(Bloomberg) -- Crypto fans — and critics — are getting a new way to juice their bets on the stocks underlying the blockchain.
Direxion, which oversees more than $40 billion in assets via its lineup of leveraged and inverse products, is launching a pair of exchange-traded funds with some memorable tickers that will allow traders to bet on, or against, the digital asset industry as a whole.
The Direxion Daily Crypto Industry Bull 2X Shares (ticker LMBO) will use derivatives to double the performance of an index of distributed ledger and decentralized payment technology companies while the Direxion Daily Crypto Industry Bear 1X Shares (REKT) will deliver the opposite performance of the benchmark.
Launching Wednesday, the first crypto-related funds for the firm are designed to reflect only single-day moves.
The two funds are tied to a gauge from Solactive AG which tracks around 25 firms in the blockchain technology and decentralized finance space, according to a press release. Nvidia Corp, Advanced Micro Devices Inc. and Coinbase Global Inc. are among its holdings, as well as Visa Inc., Mastercard Inc. and PayPal Holdings Inc. The index has gained roughly 30% year-to-date and rebalances quarterly.
Edward Egilinsky, managing director at Direxion, is bullish the blockchain space will continue to grow as institutional traders warm up to crypto, particularly after the successful debut of nearly a dozen spot Bitcoin ETFs in January.
“These are certainly not buy-and-hold type of products, but this gives you an opportunity to trade crypto-related stocks,” he said. “These aren’t going to be for the masses; these are going to be for sophisticated retail, high-velocity clients.”
The twin debut comes as leveraged and inverse ETFs, which use derivatives to boost returns or pay out the opposite of some stock or index’s return, have soared in popularity over the past year. Retail investors especially have embraced the chance to double or triple their gains — at the risk of compounding their losses. Leveraged ETFs have amassed around $9.4 billion of inflows so far in 2024, on track to surpass last year’s $10.2 billion, according to data compiled by Bloomberg Intelligence.
While such funds have seen increased demand, blockchain and crypto-related ETFs have not. Related products tracked by BI have logged six-straight months of outflows this year to the tune of $534 million, reversing their nearly $500 billion haul for 2023.
Egilinsky sees the tickers for the two ETFs boosting their appeal to a crypto audience. Lambo, a moniker for Lamborghinis, has become meme shorthand for success among crypto traders while Rekt, a misspelling of “wrecked,” is often used for describing a poorly performing portfolio.
LMBO will have a 0.75% management fee while REKT’s will be 35-basis points.
Read: From Airdrops to Yield Farming: The Definitive Crypto Glossary
--With assistance from Emily Graffeo.
©2024 Bloomberg L.P.
