For those not familiar with what bitcoin is; it is basically a digital currency for which no banking system or even a government is needed. The general narrative around Bitcoin that has been molded over the years is that of ‘digital gold,' where its predetermined issuance rate — controlled by its mining difficulty adjustment and decentralized network — provides significant advantages over fiat currencies in knowing that your investment will not be diluted through arbitrary inflation.
Although the Fund does not intend to provide investors with exposure to an amount of Bitcoin futures in excess of the Fund’s net assets, the Fund will seek to achieve and maintain the Target Exposure of 100% by using leverage through Bitcoin investment sites futures contracts, which will provide leveraged exposure to the underlying asset to the extent the notional exposure provided by the futures contract exceeds the margin posted by the Fund, and through reverse repurchase agreements.
The Fund will generally hold its investments in Bitcoin futures during periods in which the price of Bitcoin is flat or declining as well as during periods in which the price of Bitcoin is rising, and the Adviser will generally not seek to change the Fund’s Target Exposure based on daily price changes.
However, repurchase offers and the need to fund repurchase obligations may affect the ability of the Fund to be fully invested or may force the Fund to maintain a higher percentage of its assets in liquid investments, which may harm the Fund’s investment performance.
Coinbase tends to be a good starting point for any beginner investor, due to its intuitive interface and the ability to start purchasing other leading cryptocurrencies too such as Ethereum , Bitcoin Cash and LitecoinAs with all financial investments, it's vital that you learn how to protect your assets.
The Fund is a newly-organized closed-end management investment company with no history of operations, thus has no financial statements or other meaningful operating or financial data on which potential investors may evaluate the Fund and its performance, and is designed for long-term investors and not as a trading vehicle.
The ability of the Fund to maintain its target portfolio is highly dependent on its ability to obtain economic leverage through transactions such as reverse repurchase transactions or other forms of financing, as well as its ability to obtain sufficient exposure to Bitcoin through Bitcoin futures to achieve its target exposure, as described above under “Investment Objective and Principal Investment Policies” and “Borrowing and Leverage.” Although the Fund intends to seek this leverage from various financial institutions and FCMs, there can be no assurance that these parties will provide or continue to provide leverage to the Fund in the future on acceptable terms, or at all.
Bitcoin and other cryptocurrencies operate on a technology called blockchain” You may have heard of blockchain referred to as a distributed, decentralized, public ledger,” but the technology is actually easier to understand than that definition sounds.
In order to qualify for such treatment, the Fund must derive at least 90% of its gross income each taxable year from qualifying income, meet certain asset diversification tests at the end of each fiscal quarter and distribute at least 90% of its investment company taxable income.