rewrite this title New ETFs aim to harvest 11% Bitcoin premiums with zero net market exposure

Defiance ETFs filed applications for Bitcoin and Ethereum related market-neutral exchange-traded funds (ETFs) called NBIT and DETH that execute a hedge fund arbitrage strategy.

Bloomberg senior ETF analyst Eric Balchunas shared the filings on Sept. 16, noting that the funds operate a strategy of buying spot digital assets while shorting futures contracts to capture premiums.

The funds will purchase spot Bitcoin and Ethereum ETFs like BlackRock’s IBIT and ETHA, while simultaneously shorting futures contracts to profit from price differentials.

Bloomberg ETF analyst James Seyffart documented Ethereum basis trades delivering gross annualized returns averaging around 10% during stable market conditions.

At the same time, Bitcoin basis trades showed gross yields reaching 11% in recent months, with periods touching double digits during volatile periods.

The trade’s market-neutral structure generates returns regardless of cryptocurrency price direction by exploiting inefficiencies between spot and derivatives markets.

Performance data reveals market-neutral profits

Seyffart’s analysis shows Ethereum basis returns maintained yields around 10% through much of 2025, though they experienced single-digit and negative performance during market stress from late December 2024 through mid-March 2025.

Bitcoin’s basis trade generated consistently low single-digit returns through the first quarter before climbing to levels near 8% by late July.

The basis trade capitalizes on premiums that cryptocurrency futures contracts typically command over spot prices. Bitcoin futures premiums reached 17% annualized following the November election before moderating to current levels.

Defiance has established itself through innovative crypto-adjacent products. The company launched leveraged single-stock ETFs targeting Strategy and Riot Platforms, both Bitcoin proxy companies.

Defiance also filed “BattleShares” ETFs that simultaneously hold long and short positions across Bitcoin versus Ethereum and Bitcoin versus gold pairs.

The new filings add to the pile of nearly 100 crypto-related ETF filings awaiting a decision by the US Securities and Exchange Commission.

The company’s proposed funds make an institutional strategy accessible to retail investors without the capital requirements and operational complexity needed to execute basis trades independently.

Mentioned in this article