A new bitcoin exchange-traded fund has hit Europe — with a twist.
Debuted by $9.2 billion ETF provider HANetf, the Arrow Bitcoin EUR Hedged ETF gives European investors exposure to bitcoin while reducing the impact of movements between the euro and the US dollar.
Because bitcoin is priced in dollars, European investors who buy an unhedged product are exposed to two things at once: the bitcoin price and the dollar’s moves against the euro.
The new exchange-traded commodity — a fund that gives investors exposure to a commodity — aims to remove the second of these in a product described by HANetf as the world’s first.
“With this launch, we are bringing the established logic of euro-hedged ETFs to the crypto market,” Hector McNeil, co-founder and co-CEO of HANetf, said in a statement. “Investors have long understood that currency movements can have a meaningful impact on returns on different asset classes, for example gold.”
“Similar to gold, bitcoin is priced in US dollars, meaning European investors can end up taking two views at once: a view on bitcoin itself and a view on the dollar.
HSBC will provide the currency hedging for the product. Typically, euro-hedged funds work by a bank entering forward contracts to sell the equivalent dollar amount for euros at a fixed rate on a future date.
If the dollar then weakens against the euro, the loss on the bitcoin’s euro value is offset by a gain on the forward, and vice versa. These contracts are usually rolled monthly, and the hedge is resized when they roll.
Bitcoin ETFs in the U.S. have been a huge success since the Securities and Exchange Commission approved them in 2024.
Managed by the likes of BlackRock, Fidelity, Morgan Stanley and others, the products allow investors to buy shares that track the price of bitcoin, without having to worry about storing the cryptocurrency themselves.
The funds now manage a combined total of $111.1 billion in assets, according to Coinglass, following the most successful launch in the history of ETFs.