Grayscale Launches Two Bitcoin ETFs for Income Generation

Crypto asset manager Grayscale has introduced two new exchange-traded funds (ETFs) that provide investors with a unique way to generate income from Bitcoin's (BTC) volatility. The two ETFs, the Bitcoin Covered Call ETF (BTCC) and the Bitcoin Premium Income ETF (BPI), will begin trading on the New York Stock Exchange.

The BTCC employs a covered call writing strategy, selling call options close to the current spot price of Bitcoin. This approach allows the fund to generate income from the premiums received, which are then distributed to investors as dividends on a monthly basis. The strategy is designed to provide investors with a steady cash flow while also offering some protection against market downturns through the premium income.

The BPI, on the other hand, targets options with strike prices that are significantly higher than the current spot price, known as deep out-of-the-money options. This strategy enables investors to participate in the potential upside of Bitcoin while also receiving some income from the options premiums. Both ETFs use options contracts that track other Bitcoin ETFs, including Grayscale's own Bitcoin Trust and Bitcoin Mini Trust.

Despite the recent surge in institutional investment into Bitcoin through spot ETFs, the cryptocurrency's volatility remains a significant factor. After gaining nearly 48% in the fourth quarter, Bitcoin experienced a 12% loss in the first quarter of 2025. This volatility highlights the need for investment products that can offer differentiated sources of income to cushion against market fluctuations.

As institutional investors continue to increase their exposure to Bitcoin, there is a growing demand for products that can provide stable income streams while managing the risks associated with the cryptocurrency's volatility. Grayscale's new ETFs address this demand by offering innovative investment strategies that leverage Bitcoin's price movements to generate regular income for investors.