U.S. asset manager proposes 'Bitcoin AfterDark ETF'…targets only after-hours price movements

In the U.S., a new form of ETF that holds bitcoin only during off-market hours has been proposed. The strategy product is based on an analysis that bitcoin returns mainly occur after market close, and the market is watching whether it can deliver performance differentiated from existing bitcoin ETFs.

On the 9th (local time), according to Cointelegraph, Tidal Trust II proposed the listing of the 'Nicholas Bitcoin and Treasuries AfterDark ETF' in a new regulation filing (Form N-1A) submitted to the U.S. Securities and Exchange Commission (SEC). The ETF would buy bitcoin after U.S. market trading hours end and sell at the market opening.

According to the SEC filing, the product would use bitcoin futures or bitcoin-linked funds to track only price movements during overnight hours. During U.S. market open hours, it would allocate to U.S. Treasuries, money market funds, and cash-like assets. This seeks to avoid intraday bitcoin price volatility while selectively targeting overnight volatility.

ETF analyst Eric Balchunas said, "Looking at last year's data, most bitcoin returns occurred during off-hours," adding, "The AfterDark ETF could potentially outperform existing products." He explained that ETF fund flows and adjustments in derivatives positions could affect overnight price formation.

It is still unclear whether the SEC will approve the product. Although the SEC has broadly approved bitcoin- and ethereum-based futures ETFs, spot ETFs, and staking-based ETFs, a newly structured ETF is likely to undergo changes or modifications during the review process.

Meanwhile, U.S.-listed bitcoin spot ETFs recorded about $4 billion in net outflows in November, marking the largest capital withdrawal this year. BlackRock's iShares Bitcoin Trust and Fidelity's Wise Origin Bitcoin Fund led the major outflows.