- Cboe has filed with US regulators to list the first American aiming for three times the daily move of bitcoin and ether. LeverageShares already runs versions of these in Europe.
- The 3x applies to one day at a time. The fund resets every evening, so returns over weeks compound rather than simply multiply.
- In a choppy market that reset can leave you down even when the underlying price ends exactly where it started.
Cboe has asked American regulators to approve the first US funds designed to return three times the daily move of bitcoin and ether. The number in the name is real enough. It just measures something a great deal smaller than most people reading it assume.
These products are built around a single day, but they get talked about as though they multiply everything. If they’re approved, you’ll see the number quoted constantly, usually without the word that qualifies it.
The gap between “three times today’s move” and “three times this year’s move” is where a lot of money quietly disappears, and it does so through ordinary maths rather than anything going wrong. Knowing how that works is the difference between reading the pitch and understanding the product.
Start with the plain version
An ETF, or exchange-traded fund, is a pot of money that buys something on your behalf and then sells you a share of the pot. That share trades on a normal stock exchange, alongside company shares.
A spot bitcoin ETF is the simplest form of this. The fund holds real bitcoin, you own a share of the fund, and your share moves roughly in line with the bitcoin price. No exchange account, no wallet, no to lose. That’s the version large institutions have been buying: Harvard’s endowment held its stake in BlackRock’s IBIT steady last quarter after cutting it 43% the quarter before, and Abu Dhabi’s Mubadala and the Abu Dhabi Investment Council kept their combined 22.9 million shares in place.
What the “3x” is actually doing
A 3x fund doesn’t hold three times as much bitcoin. It can’t: it only has your money, not three times your money.
Instead it uses derivatives, which are contracts whose value is tied to the price of something else. Futures and swaps let the fund agree exposure to £3 of bitcoin for every £1 it actually holds, with the other £2 effectively borrowed from a counterparty. The fund pays for that arrangement, and the cost sits inside the product rather than on your statement.
The important bit is what that exposure is measured against. The fund’s target is three times the move of bitcoin from today’s close to tomorrow’s close. Every evening it rebalances: it recalculates how much exposure it needs to keep the ratio at three to one against its new, larger or smaller pot of money, and it adjusts. Then it starts again from scratch.
Why the reset changes the answer
Because each day starts from a new base, the results chain together rather than adding up. In finance that’s called compounding, and it cuts both ways depending on whether the market is trending or bouncing around.
Take £1,000 in a 3x bitcoin fund, ignoring costs for a moment.
Day one, bitcoin rises 10%. The fund targets 30%, so your £1,000 becomes £1,300.
Day two, bitcoin falls back to exactly where it started. From the higher level, that’s a drop of about 9.1%. The fund targets three times that, roughly 27.3%, and your £1,300 becomes about £945.
Bitcoin has ended the two days flat. You’re down around £55, about 5.5% of what you put in. Nothing malfunctioned and nobody took your money. The fund did precisely what it said on both days.
Stretch that over a sideways month of daily ups and downs and the effect repeats, day after day. This is usually called volatility decay, and it’s the single most misunderstood feature of geared funds. Bitcoin and ether are among the most volatile assets you can buy exposure to, which is exactly the condition in which the decay bites hardest.
The other side of it
Compounding isn’t only a drag. When a price moves in one direction for several days running, the same mechanism works in your favour and can beat the simple multiple.
Two consecutive 5% rises take bitcoin up 10.25%. Three times that would be 30.75%. The fund, resetting each night, would return about 32.25%. On a sustained run, geared products can outperform the headline multiple, which is why traders use them for short holding periods and why the sales material tends to feature charts of trending markets.
Then there are the running costs. Geared products carry higher management fees than plain spot funds, plus the financing cost of the borrowed exposure, and both are charged daily whichever way the price goes. Over a long flat stretch, the fees and the decay pull in the same direction.
Can you actually buy one in the UK?
Probably not through an ordinary retail account, and for two separate reasons.
The first is regulatory. The Financial Conduct Authority banned the sale of crypto derivatives and crypto exchange-traded notes to retail consumers in January 2021, on the grounds that ordinary investors couldn’t reliably value them. It lifted the exchange-traded note part of that ban in October 2025, allowing retail access to crypto ETNs listed on UK recognised exchanges. The derivatives ban stayed. Geared products of this kind are built out of derivatives, which puts them on the wrong side of that line for UK retail investors.
The second reason is duller and applies to almost every US-listed fund. European rules require a short standardised disclosure document, a Key Information Document, before a product can be sold to retail investors here. American issuers generally don’t produce one, so UK brokers typically block retail clients from buying US-listed ETFs at all. Professional and elective professional clients are treated differently.
Europe is the exception rather than the workaround. LeverageShares launched the world’s first 3x bitcoin and ether products there, listed as exchange-traded products under European rules, which is what makes the US filing a first rather than an invention.
How the big money does the same thing
Worth noting that institutions already gear their crypto exposure, they just do it separately from the fund. UBS disclosed in its latest US quarterly filing that its call options on the IBIT bitcoin ETF rose roughly 24-fold, while its put option exposure fell about 53% and its direct holding of the fund itself rose 12% to 407,890 shares.
Options are a different instrument with different risks, but the point stands: a large bank builds its leverage deliberately, sizes it, and can unwind it whenever it likes. A 3x ETF packages that decision into a single ticker and rebalances it for you every evening, whether that suits your holding period or not.
What to watch
Whether the SEC approves the listing at all, and on what terms. Regulators have historically attached conditions to geared products, from naming requirements to the disclosures a broker must show before you can trade one. Those conditions tell you how the regulator views the risk.
Beyond that, the thing to check whenever you see one of these funds quoted: the period. Any performance figure for a geared product is meaningless without the window attached, because the same fund can look brilliant over three trending days and dismal over three flat months. If the number is presented without a timeframe, it isn’t telling you anything.