A fix for traders who miss the wild swings in bitcoin and ether has now been approved by the SEC, and the product comes with a warning — it is built for trading, not investing. The agency gave its approval on Oct. 2, endorsing a Cboe BZX rule amendment that permits Volatility Shares’ six ETFs to deliver triple the daily return of their underlying holdings. The group includes products tied to bitcoin, ether, gold, silver, crude oil and natural gas. Prior to this move, crypto funds operating in the U.S. were limited to no more than 2x leverage.
What the approval actually changes
The funds can’t trade yet. The issuer still needs the SEC to declare its registration statement effective, and the order doesn’t set a deadline. These products will hold regulated futures tied to bitcoin and ether, not the actual tokens themselves. That means investors won’t be buying or holding the coins directly; instead, they’ll be buying shares in a fund whose value tracks the futures contracts.
This development breaks through the 2x limit placed upon crypto ETFs. Seasoned market observers have already identified the exact kind of investors these funds are constructed for.
“Leveraged ETFs are for trading, not investing,” Bloomberg’s Senior ETF Analyst Eric Balchunas said on X.
The daily rebalance problem
Every day these funds must rebalance themselves to hold leverage at 3x. This compels them to purchase more futures following gains and offload more after losses — mechanical transactions that typically strike near the close and tend to magnify intraday movements. As the fund expands in size, its influence grows accordingly, meaning larger trades could move the underlying futures markets more.
Daily resets mean that multi-day returns can stray widely from 3x, and they can move in the opposite direction. Adam Back, the CEO of Blockstream, described the situation more directly: “Auto re-leveraging strategies bleed capital in a sideways chop, especially with a high volatility underlying… like bitcoin.”
The effect where a position loses value over time because of price swings is called volatility decay. If bitcoin goes up 10% one day and drops 10% the next, it closes down 1%. A 3x fund would gain 30% on the rise and lose 30% on the fall, closing down 9%. Because the fund has to rebalance back to 3x each day, it has to sell some of its holdings after a gain and buy more after a loss, and those trades happen at whatever the market offers.
Without a steady direction to follow, the leveraged product loses capital the more the price swings between its top and bottom limits.
What Volatility Shares itself says
The company itself flagged the risk in its own filing, according to Volatility Shares. “The more volatile the benchmark, the greater the potential for volatility decay,” is what the company said in its preliminary prospectus, which was filed as part of a Form S-1 registration statement.
The filing is blunt about who should trade these. “An investment in 3x Bitcoin ETF is not suitable for all investors, may be deemed speculative, and should be considered only by persons who can bear the risk of total loss associated with an investment in 3x Bitcoin ETF,” it said.
“Leveraged ETFs are for trading, not investing.”
Futures add another cost
The rolling of futures adds its own kind of friction. As contracts approach their expiry date, the fund must sell them and buy newer-dated ones, which frequently come at a higher price. This constant process of rolling produces a steady drag on long-term returns, a complaint that standard bitcoin futures ETFs encountered when they were launched for the first time in 2021.
That rolling cost applies to all six of the fund’s products, whether they track bitcoin, ether, gold, silver, crude oil or natural gas. The expense of constantly buying newer contracts is baked into the daily operation of the funds.
Why this matters
The green light marks another step toward crypto matching the offerings of conventional assets. Short-term traders and speculators now have access to a potent instrument. Those with a longer horizon and a preference for lower risk still find spot ETFs the better option.
What’s trending today
Bitcoin is down today, but its wider trend is telling a different story. The simple moving averages of its price over the past 50-, 100- and 200-days are one “crossover” away from a full bullish alignment it has not seen since 2025.
During Asian trading hours, the euro reached a low of $1.1161, the weakest level since May 2025, and was last seen down 0.62% at $1.1118. The US dollar index climbed 0.39% to 102.33, having risen as far as 102.53, its highest point since April 10, 2025.
Yields on U.S. Treasury securities moved downward slightly on Monday, following a substantial sell-off during the previous week. Traders now await the release of the minutes from the Federal Reserve’s most recent gathering.
Last week, ether waiting to leave Ethereum’s staking system increased by more than fivefold within three days, sending the exit queue to its longest wait of 2026. Much of the surge in withdrawals came from MetaMask, which announced a security incident on Sept. 30.
The volatility chart
The graph displays daily movements in Volmex’s BVIV, a measure of the expected price swings in bitcoin. BVIV is the annualized 30-day bitcoin implied volatility index, otherwise known as the bitcoin VIX.
Since mid-September, the index has stayed mostly steady between 35% and 40%, which suggests traders see orderly conditions ahead even with the Dollar Index and Treasury yields both rising. Calm trading is often part of an upward move. Still, long periods without much movement tend to come before major changes.
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Who wins and who loses
| Role | What they get | What they risk |
|---|---|---|
| Short-term trader | 3x daily exposure | Volatility decay, daily rebalance pain |
| Long-term holder | Spot ETFs | Risk not specified |
| Speculator | Powerful tool | Total loss |
The sign of approval shows crypto gaining the same kind of trading tools that traditional assets have long enjoyed, yet it also serves as a caution. These are instruments for trading, not for investment.
Daily traders who wish to take advantage of the market’s daily moves will find the 3x funds useful. Everyone else should keep things straightforward: spot ETFs still offer the most reliable option.
Source material: “SEC approves a 3x fix for bitcoin and ether traders who miss the wild swings,” CoinDesk.
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