Tidal Trust has put forth a new regulatory filing proposing the listing and trading of an exchange-traded fund (ETF) designed to hold Bitcoin during off-market hours.
In a filing submitted to the US Securities and Exchange Commission (SEC) on Tuesday, Tidal Trust II submitted a Form N-1A registration statement. This filing aims to add two ETFs from Nicholas Wealth Management, which are tied to Bitcoin (BTC), to its existing fund offerings.
The proposed offerings, including the Nicholas Bitcoin and Treasuries AfterDark ETF, would execute Bitcoin purchases only after US market trading hours concluded and sell them at the market's opening. This strategy would effectively mean the fund holds Bitcoin throughout the day.
The SEC filing elaborated on this strategy, stating: "When utilizing Bitcoin Futures, the Fund trades these instruments during US overnight hours and closes them out shortly after the US market opens each trading day. When utilizing Bitcoin Underlying Funds, the Fund purchases a security at US market close, and then sells the position around US market open, thereby capturing any market movement that occurred during US overnight hours."
The asset management company indicated that during daytime hours, the ETF would allocate its assets to "US Treasuries, money market funds and other cash equivalents." This investment approach would allow traders to mitigate some of the potential price volatility associated with Bitcoin while maintaining indirect exposure to the cryptocurrency.
ETF analyst Eric Balchunas commented on the filing, stating: "We looked at this last year and found most of the gains are in fact after hours. Doesn’t mean the ETFs aren’t having impact. Some of this is positioning [because] of the ETFs etc or derivatives based on flows etc etc. But yeah, Bitcoin After Dark ETF could put up better [returns]."
Regulatory Landscape for Crypto Investments
The current filing does not guarantee approval from the SEC and remains subject to potential changes. The regulator has previously approved a variety of crypto-related investment vehicles. These include ETFs based on Bitcoin and Ether (ETH) futures, spot digital asset ETFs, and staked crypto ETFs.
Recent Trends in Spot Bitcoin ETFs
In November, spot Bitcoin ETFs listed on US exchanges experienced record outflows, with approximately $4 billion withdrawn. BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund were among the largest ETFs on the market and led these redemptions.