Grayscale launches Bitcoin options ETF with a focus on income generation

• Asset manager Grayscale announces the launch of Grayscale Bitcoin Covered Call and Grayscale Bitcoin Premium Income ETFs.
• Both funds aim to provide investors with dividend income by leveraging call options on Bitcoin ETFs.
• The launch follows Bitcoin's range-bound movement in the past few weeks due to President Trump's tariff announcements.

In a press release on Wednesday, Grayscale announced the launch of Bitcoin options-based ETFs, the Grayscale Bitcoin Covered Call ETF (BTCC) and Grayscale Bitcoin Premium Income ETF (BPI).

The fund intends to provide investors with dividend income by leveraging call-writing strategies on the company's existing Bitcoin ETF products.

BTCC will focus on income generation by writing or selling call options with strike prices close to Bitcoin's spot price. Instead of relying on Bitcoin's capital appreciation potential, the fund benefits by collecting option premiums and distributing them to investors. The premiums collected could also cushion losses during market downturns. However, the upside potential for investors is limited if Bitcoin rises above the option's strike price.

"By selling calls near spot prices, BTCC seeks to deliver a principal focus on income generation," Grayscale wrote. "This makes BTCC an income-first strategy, potentially ideal for investors seeking regular cash flows and high yielding opportunities."

BPI, on the other hand, is tilted toward providing investors with a huge upside capital appreciation potential and a lower dividend income. As a result, the fund focuses on selling calls with strike prices that are way above Bitcoin's price.

"This blended approach provides investors with an opportunity to participate in the capital appreciation potential of Bitcoin with the benefits of income," Grayscale added.

Bitcoin stays range-bound as Trump tariffs trigger risk-off sentiment

The launch of BTCC and BPI may have been motivated by Bitcoin's horizontal move in the past weeks following President Donald Trump's announcement of tariffs on international trading partners.

On Wednesday, Trump aims to announce 25% tariffs on imports from Mexico and Canada and reciprocal tariffs on all international trading partners as part of the so-called “Liberation Day.”

Investors are leaning toward risk-off strategies, as revealed in weak crypto ETF flows and Bitcoin's failure to rise above the $90,000 level in the past month. The Crypto Fear and Greed Index has also stayed below 50 for over a month, signaling fear among investors.