Key Takeaways
- • Calamos Investments' global head of ETFs Matt Kaufman told Benzinga that investors worried about a Bitcoin correction can use protected Bitcoin ETFs rather than only trimming spot Bitcoin ETF exposure, because reducing a position and protecting a position "solve for much different objectives."
- • Kaufman's illustration: an investor holding 70%-80% in spot Bitcoin ETFs with the remainder in cash would lose 28%-32% on the combined allocation if Bitcoin fell 40%, before cash income, fees, taxes and rebalancing.
- • Calamos offers three Protected Bitcoin ETFs targeting 80% (CBTO), 90% (CBXO) and 100% (CBOO) protection over a defined outcome period, with maximum losses of roughly 20%, 10% and zero, respectively, before fees, in exchange for capped gains.
- • The protection is a trade-off: the 80% strategy offers more upside, while the 90% and 100% strategies give greater downside protection with lower upside caps; the targets apply only over the outcome period relative to its starting level and do not guarantee principal.
- • Kaufman said a protected structure suits investors whose targeted floor and cap fit their needs, not simply those nervous about a crash, and that a capped strategy may be wrong for investors seeking full Bitcoin upside.
Summary
Bitcoin investors concerned about another sharp correction face a choice between reducing their spot Bitcoin ETF exposure or seeking downside protection while keeping some upside, according to an exclusive interview with Matt Kaufman, global head of ETFs at Calamos Investments, published by Benzinga and syndicated on TradingView. Kaufman argued that the two approaches serve different objectives. "Reducing the position and protecting the position solve for much different objectives," he said.
Kaufman's core point is that trimming holdings does not eliminate risk on the portion retained. An investor keeping 70%-80% in spot Bitcoin ETFs and holding the remainder in cash would lose 28%-32% on the combined allocation if Bitcoin fell 40%, ignoring cash income, fees, taxes and rebalancing. "Selling 20%–30% reduces the dollars exposed, but it leaves the remaining Bitcoin investment fully exposed to a decline," Kaufman said.
Calamos offers three Protected Bitcoin ETFs: the Calamos Bitcoin 80 Series Structured Alt Protection ETF – October (CBTO), targeting 80% protection; the Calamos Bitcoin 90 Series Structured Alt Protection ETF – October (CBXO), targeting 90% protection; and the Calamos Bitcoin Structured Alt Protection ETF – October (CBOO), targeting 100% protection. CBTO targets a maximum loss of approximately 20%, CBXO approximately 10%, and CBOO aims to protect against the entire decline in the reference Bitcoin index over the outcome period. If the reference index fell 40% over the full outcome period, an investor in a strategy achieving its target would lose roughly 20%, 10% and nothing, respectively, before fees and expenses. Kaufman described the structure as seeking "a defined ending loss floor on the invested amount, in exchange for a cap on gains."
The article stresses that the trade-off is material. The 80% strategy generally offers greater upside potential, while the 90% and 100% strategies provide more downside protection in exchange for lower upside caps. The targets apply over the defined outcome period relative to its starting level and do not guarantee principal or protect against losses measured from every purchase price, particularly for purchases made after the outcome period has begun. Investors may also experience interim price fluctuations.
Kaufman acknowledged that protected strategies are not universally appropriate and that they are not inherently superior to holding spot Bitcoin alongside cash, since that combination preserves uncapped Bitcoin upside and the cash may earn interest. "If an investor's overriding objective is to capture all of Bitcoin's potential upside, and they have both the financial capacity and the willingness to accept the full downside, a capped strategy may be the wrong tool," he said. He added that the decision should rest on investor goals rather than fear of a correction: "I would favor the protected structure when the targeted floor and available cap better fit the investor's needs—not simply because the investor is nervous about a crash."
Kaufman's core point is that trimming holdings does not eliminate risk on the portion retained. An investor keeping 70%-80% in spot Bitcoin ETFs and holding the remainder in cash would lose 28%-32% on the combined allocation if Bitcoin fell 40%, ignoring cash income, fees, taxes and rebalancing. "Selling 20%–30% reduces the dollars exposed, but it leaves the remaining Bitcoin investment fully exposed to a decline," Kaufman said.
Calamos offers three Protected Bitcoin ETFs: the Calamos Bitcoin 80 Series Structured Alt Protection ETF – October (CBTO), targeting 80% protection; the Calamos Bitcoin 90 Series Structured Alt Protection ETF – October (CBXO), targeting 90% protection; and the Calamos Bitcoin Structured Alt Protection ETF – October (CBOO), targeting 100% protection. CBTO targets a maximum loss of approximately 20%, CBXO approximately 10%, and CBOO aims to protect against the entire decline in the reference Bitcoin index over the outcome period. If the reference index fell 40% over the full outcome period, an investor in a strategy achieving its target would lose roughly 20%, 10% and nothing, respectively, before fees and expenses. Kaufman described the structure as seeking "a defined ending loss floor on the invested amount, in exchange for a cap on gains."
The article stresses that the trade-off is material. The 80% strategy generally offers greater upside potential, while the 90% and 100% strategies provide more downside protection in exchange for lower upside caps. The targets apply over the defined outcome period relative to its starting level and do not guarantee principal or protect against losses measured from every purchase price, particularly for purchases made after the outcome period has begun. Investors may also experience interim price fluctuations.
Kaufman acknowledged that protected strategies are not universally appropriate and that they are not inherently superior to holding spot Bitcoin alongside cash, since that combination preserves uncapped Bitcoin upside and the cash may earn interest. "If an investor's overriding objective is to capture all of Bitcoin's potential upside, and they have both the financial capacity and the willingness to accept the full downside, a capped strategy may be the wrong tool," he said. He added that the decision should rest on investor goals rather than fear of a correction: "I would favor the protected structure when the targeted floor and available cap better fit the investor's needs—not simply because the investor is nervous about a crash."
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.