Why NEOS Bitcoin High Income ETF (BTCI) is a Strategic Play for Income-Driven Bitcoin Exposure in 2025

In a world where Bitcoin's price swings can make even the most seasoned investors clutch their pearls, the NEOS Bitcoin High Income ETF (BTCI) has emerged as a clever workaround for income-focused investors. By leveraging a data-driven covered call strategy, BTCI turns the crypto market's turbulence into a steady stream of monthly payouts—without requiring investors to trade options themselves. For those who want Bitcoin exposure but prefer a seatbelt to a rollercoaster, this ETF is a masterstroke.

The Covered Call Play: Turning Volatility into Income

BTCI's core strategy is simple in concept but sophisticated in execution: it sells call options on Bitcoin Futures ETFs, collecting premiums that translate into monthly distributions. This approach is particularly potent in a high-volatility environment. When Bitcoin's price swings wildly, option buyers are willing to pay a premium for the right to lock in future prices, and BTCI captures that cash.

As of June 30, 2025, the ETF's cumulative net asset value (NAV) performance since inception stood at 47.79%, with a market performance of 48.27%. These figures aren't just impressive—they're a testament to how effectively BTCI's options overlay harnesses Bitcoin's volatility. The fund's July 2025 distribution of $1.4716 per share (a 27.92% annualized yield) further underscores its income-generating prowess.

Balancing Risk and Reward: The Tax-Efficient Edge

One of BTCI's most compelling features is how it balances Bitcoin's price swings with tax efficiency. While direct Bitcoin ownership exposes investors to capital gains taxes on every move, BTCI's structure ensures that 96% of its distributions are classified as return of capital, not taxable income. This means investors can reinvest payouts without immediate tax hits, creating a compounding effect that's rare in the crypto space.

Critics might argue that a 28% yield is unsustainable, but BTCI's strategy is built for the long game. By writing call options on Bitcoin Futures ETFs, the fund maintains exposure to Bitcoin's upside while capping downside risks. During a rally, the fund's gains are limited by the strike prices of the sold options, but during a downturn, the premiums collected act as a buffer. For investors who want to avoid the emotional whiplash of direct Bitcoin ownership, this is a godsend.

Why BTCI Beats Direct Bitcoin Ownership for Income-Seekers

Let's not mince words: Bitcoin is a wild beast. Its price can surge 30% in a week or drop 20% overnight. For investors who want income, not speculation, BTCI offers a smoother ride. Here's how:

1. Predictable Payouts: BTCI's monthly distributions are structured, unlike Bitcoin's erratic price. The July 2025 payout, for example, was announced with precision, giving investors time to plan.
2. Diversification: While 72% of BTCI's portfolio is in cash, the remaining 28% is spread across Bitcoin ETPs and derivatives, reducing concentration risk.
3. Active Management: Managed by Garrett Paolella and Troy Cates, BTCI's team uses algorithms to optimize option strikes, ensuring the fund adapts to market conditions.

The Caveats: Is BTCI for Everyone?

No investment is without risks. BTCI's high yield comes with a caveat: 96% of the payout is return of capital, which means investors are effectively getting their principal back in a disguised form. While this reduces taxable income, it also raises questions about long-term sustainability. If Bitcoin's price stagnates, the fund's ability to generate new premiums could wane, forcing it to rely on return of capital to meet distribution targets.

Additionally, BTCI's 0.98% expense ratio is higher than passive Bitcoin ETFs, which typically charge 0.4% or less. For income-focused investors, this is a trade-off worth considering—paying extra for the convenience of structured options trading and tax efficiency.

The Bottom Line: A Strategic Play for 2025

If you're an income-driven investor who wants to tap into Bitcoin's potential without the headache of managing options, BTCI is a no-brainer. Its covered call strategy turns volatility into a revenue stream, and its tax-efficient structure gives you more control over your gains. While it's not a magic bullet, BTCI offers a compelling alternative to direct Bitcoin ownership—especially in a year like 2025, where crypto markets are likely to remain a rollercoaster.

For those who want to stay ahead of the curve, here's the takeaway: allocate a portion of your Bitcoin exposure to BTCI. Let the fund's active management and options expertise work for you, while you enjoy the ride—without the fear of missing out on a crash.

In the end, BTCI isn't just another crypto ETF—it's a blueprint for how to monetize volatility. And in 2025, that's exactly what you need.