Bitcoin News Today: Leverage Shares Launches 3x Crypto ETFs Amid Plunge, Sparking Risk Debate

Leverage Shares plans to launch 3x and -3x leveraged Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) for European investors next week, despite a steep decline in crypto prices. The products, set to debut on Switzerland's SIX Exchange, will offer triple-long and triple-short exposure to both assets, marking an expansion of the firm's leveraged product suite, which already includes similar offerings for equities like Apple and Tesla according to market analysis. The move comes as Bitcoin and Ethereum have fallen 21% and 26% respectively, with BTC trading near $84,000 and ETH at $2,700.

The launch has sparked debate among market participants. Bloomberg ETF analyst Eric Balchunas noted the timing is "either really good or really bad depending on your POV," highlighting the inherent risks of leveraged products in volatile markets. Historical data from equity leveraged ETFs, such as the 3x Dow Jones ETF (UDOW), illustrate the challenges. UDOW, which seeks to deliver three times the daily performance of the Dow Jones Industrial Average, has underperformed its benchmark over multi-year periods due to compounding effects and volatility decay. For example, between February 2010 and November 2025, UDOW delivered 5.9 times DIA's total return, but its annualized return ratio was only 2.0, underscoring the "drift" risk common to leveraged funds.

The crypto market's current struggles amplify these concerns. A 10X Research report revealed that BitMine Immersion Technologies, the largest corporate Ether holder, faces $3.7 billion in unrealized losses on its holdings. Meanwhile, broader crypto treasuries are seeing declining net asset values (NAVs), complicating fundraising and trapping investors with paper losses. The MSCI index is also considering excluding corporate crypto treasuries with over 50% crypto assets from its stock market index, adding regulatory uncertainty.

Leverage Shares' entry into the European market follows a regulatory green light for crypto ETFs in the U.S. In January 2024, the SEC approved Bitcoin spot ETFs, a move hailed as a catalyst for institutional adoption. However, leveraged products remain untested in crypto, with Defiance Investments' proposed 3x leveraged crypto ETFs still pending approval. Critics warn that high leverage could lead to rapid liquidations during sharp price swings, a risk compounded by the crypto market's current fragility.

The firm's strategy mirrors existing leveraged ETF structures. For instance, UDOW employs a mix of swaps, futures, and cash instruments to maintain its 3x exposure, with daily rebalancing to preserve leverage. While this approach offers liquidity and ease of access, it also exposes investors to fees and counterparty risks, as seen in the fund's reliance on six major banks for swap contracts.

As Leverage Shares prepares to launch its BTC and ETH products, the market's reaction will hinge on whether investors view the funds as tools for short-term speculation or long-term exposure. With crypto markets in a sustained downtrend, the timing underscores both the potential rewards and perils of leveraged investing in an asset class known for extreme volatility.