Spot vs. Futures in Bitcoin Trading: REX Shares Offers a New Alternative

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In July 2024, REX Shares introduced two groundbreaking ETPs designed to revolutionize Bitcoin trading: the T-REX 2X Long Bitcoin Daily Target ETF (BTCL) and the T-REX 2X Inverse Bitcoin Daily Target ETF (BTCZ).  

These innovative products leverage the advantages of spot-based Bitcoin ETPs, offering traders powerful, cost-efficient tools for navigating Bitcoin's volatility. By combining leveraged exposure with the benefits of spot-based products, (BTCL) and (BTCZ) and provide a distinct solution for traders seeking to optimize their Bitcoin strategies. 

Note: These ETFs do not invest directly in Bitcoin. 

The Fund is not suitable for all investors.  The Fund is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios.   

Spot vs. Futures-Based Bitcoin ETPs: Key Differences and Inefficiencies 

Spot-based Bitcoin ETPs offer a direct, real-time reflection of Bitcoin's price by holding actual Bitcoin. This allows for more accurate price tracking and minimizes inefficiencies such as contango—a common issue in futures-based ETFs, where futures prices exceed the spot price, leading to diminished returns. Futures-based products also face rollover costs from periodically renewing contracts, which further erodes investor returns over time. 

Spot-based ETPs bypass these issues, offering a more cost-efficient and transparent way to gain Bitcoin exposure. By eliminating the complexities and additional costs of futures markets, they provide a clearer, less expensive means of tracking Bitcoin's performance. 

Advantages of Spot-Based Bitcoin ETPs: 

• No Rollover Costs: Unlike futures-based products, spot-based ETPs do not need to roll over contracts, eliminating an ongoing expense.
• Contango Avoidance: Spot-based products avoid contango, a situation where futures prices are higher than the spot price, which can diminish returns.
• Reduced Tracking Error: Spot ETPs track the real-time price of Bitcoin more precisely, leading to fewer tracking errors compared to futures-based ETPs, which may deviate from actual Bitcoin prices due to market fluctuations in futures contracts.

Challenges with Futures-Based Bitcoin ETPs: 

Futures-based Bitcoin ETPs, while offering exposure to Bitcoin without holding the actual asset, come with a range of inherent inefficiencies: 

• Rollover Costs: As futures contracts expire, ETPs must "roll" them over, leading to additional costs.
• Tracking Discrepancies: Futures-based ETPs may not perfectly track the spot price of Bitcoin, creating discrepancies that can disadvantage investors.
• Contango and Backwardation: In markets where futures prices are higher than spot prices (contango), or lower (backwardation), investors may lose out due to contract mispricing.

REX Shares' Innovative Approach to Bitcoin Trading 

Building on the advantages of spot-based ETPs, REX Shares has positioned BTCL and BTCZ as cutting-edge tools for traders. 

Enhanced Trading Strategies with Spot-Based ETPs 

REX Shares' BTCL and BTCZ enable traders to implement a variety of sophisticated strategies: 

• Momentum Trades: During strong Bitcoin uptrends, traders can use BTCL to amplify their exposure. The 2x leverage allows for potentially enhanced returns when Bitcoin is showing positive momentum.
• Hedging: BTCZ serves as an effective hedging tool for investors with significant Bitcoin holdings. By allocating a portion of their portfolio to BTCZ, investors can create a counterbalance to mitigate short-term volatility.
• Pairs Trading: Traders can implement relative value strategies by going long BTCL while shorting another cryptocurrency, aiming to profit from the relative price movement regardless of overall market direction.
• Short-Term Intraday Trades: Day traders can capitalize on Bitcoin's intraday price movements using BTCL and BTCZ, all within their traditional brokerage accounts.

Advanced Features of REX Shares' Spot-Based ETPs 

BTCL and BTCZ offer additional features that further enhance their utility for Bitcoin traders: 

• Options Trading: These ETPs uniquely provide options trading capabilities, allowing for more nuanced risk management and advanced trading strategies.
• Daily Resets: Both ETPs reset daily to maintain their stated objectives, benefiting short-term traders by allowing them to capitalize on daily Bitcoin price movements without the drag of compounding fees typically associated with futures-based products.

The Bottom Line: REX Shares Leads the Way in Leveraged Bitcoin Trading

REX Shares' BTCL and BTCZ represent a significant advancement in Bitcoin trading tools. They offer the advantages of spot-based ETPs combined with leveraged exposure. These products address key inefficiencies found in futures-based alternatives, such as rollover costs, tracking errors, and contango issues. By directly tracking Bitcoin's price, BTCL and BTCZ offer traders more accurate and transparent exposure to the cryptocurrency market. 

These ETPs' competitive 0.95% expense ratio demonstrates REX Shares' commitment to cost-effective trading solutions. This cost advantage and the benefits of spot-based structures position BTCL and BTCZ as innovative tools for traders navigating the dynamic Bitcoin market. 

As the cryptocurrency landscape evolves, REX Shares continues to set new standards with these sophisticated yet accessible trading instruments. BTCL and BTCZ offer potential savings and expand strategic possibilities for a wide range of Bitcoin traders, from novices to experienced professionals. 

For more information about these groundbreaking ETPs and how they can enhance your Bitcoin trading strategy, visit the REX Shares website, or explore the detailed fund pages for BTCL and BTCZ. 

The Fund is not suitable for all investors. The Fund is designed to be utilized only by knowledgeable investors who understand the potential consequences of seeking daily leveraged (2X) investment results, understand the risks associated with the use of leverage and are willing to monitor their portfolios frequently. The Fund is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios. For periods longer than a single day, the Fund will lose money if the Reference Assets’ performance is flat, and it is possible that the Fund will lose money even if the Reference Assets’ performance increases over a period longer than a single day. An investor could lose the full principal value of his/her investment within a single day if the Reference Assets lose more than 50% in one day. The Fund only intends to use reference assets that are traded on a U.S. regulated exchange. 

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the REX Shares. To obtain a Fund’s prospectus and summary prospectus call 844-802-4004. A Fund’s prospectus and summary prospectus should be read carefully before investing. 

Investing in the Funds involves a high degree of risk. As with any investment, there is a risk that you could lose all or a portion of your investment in the Funds. 

Investing in a REX Shares ETF may be more volatile than investing in broadly diversified funds. The use of leverage by a Fund increases the risk to the Fund. The REX Shares ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk, consequences of seeking daily leveraged, or daily inverse leveraged, investment results and intend to actively monitor and manage their investment. 

Distributor: Foreside Fund Services, LLC, member FINRA, not affiliated with REX Shares or the Funds’ investment advisor.

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