YBTC: Weekly Distribution Serves As A Good Income Stream To Build Bitcoin Exposure

Summary YBTC offers a unique weekly income strategy in the crypto space, boasting over a 40% distribution rate and a low expense ratio among peers. Bitcoin’s legitimacy is rising, with its market cap surpassing $2.2 trillion and institutional adoption growing, supporting long-term growth potential. YBTC’s high distribution helps manage Bitcoin’s volatility, enabling investors to build cash reserves for reinvestment and flexible portfolio strategies. I rate YBTC a hold with a buy bias, as high distributions may cap price performance and total returns could remain volatile in the short term. I have been looking to find income alternatives to invest in the crypto asset class this year because the crypto market has grown to over $2 trillion. A market of such size should be able to offer attractive investment opportunities for income. Roundhill Bitcoin Covered Call Strategy ETF ( YBTC ) shows as an effective approach to retrieve the income distribution due to its weekly schedule, which may offer a protection mechanism for cash-in in the volatile bitcoin market. In addition, the over 50% distribution rate allows investors to build a cash reserve quickly for reinvesting purposes. This flexibility is very important in the market where new Bitcoin ETFs or stocks may emerge and offer better investment opportunities. YBTC is a hold at the current level and can be considered by income-oriented investors who want to establish some crypto exposure. ETF Overview YBTC is a Bitcoin covered call ETF actively managed by Roundhill, which claims it is the first of its kind listed. The ETF was started on 01/17/2024 and has grown to an AUM of over $250 million. It is a very reasonable-sized ETF with such a short history. YBTC’s underlying is called exchange-traded products (“ETPs”). The covered call options are written and sold on Bitcoin Futures ETFs or Bitcoin ETPs to generate income distributed on a weekly schedule. Thanks to the high volatility of Bitcoin, YBTC is offering a Distribution Rate of 55.79%. YBTC ETF Holdings (Roundhill) From the holdings list above, one can see that the main components are around the iShares Bitcoin Trust ETF ( IBIT ) and Cboe Bitcoin U.S. ETF Index (CBTX). The synthetic positions are established on both ETFs, which are the underlyings. The call options are sold (marked short positions above) for credit as income. FGXXX is the government (treasury) fund that serves as the collateral for the short put options. YBTC’s expense ratio is 0.99%, which is typical for an actively managed ETF based on the complex option strategy. The following is the relevant peer group compiled using the data from Seeking Alpha. Bitcoin Income ETFs (SA) One can see in the list that YBTC has the lowest expense ratio and the highest AUM. The trading volume is over 100K, which offers reasonable liquidity. Digit Gold is Getting the Market Vote Bitcoin as an investment asset came to my attention because of Warren Buffett. He has expressed skepticism towards Bitcoin and other cryptocurrencies for years. For example, in 2018, he commented in an appearance on CNBC that bitcoin is a “mirage”, indicating its super speculative nature. Admittedly, I have been hesitant to take a serious look at Bitcoin. Fast forward to 2025, the total bitcoin market has reached the staggering $2.2 trillion , which is as large as the gold market. It is fair to say that the market is starting to buy the digital gold story for Bitcoin. On the other hand, the institutions have 6% allocation. I don’t view Bitcoin as something speculative right now. I would like to explore it as a very interesting investment alternative in this huge marketplace. As far as value is concerned, I view Bitcoins as a collection of old stamps or an oil painting. Scarcity is the main property and value anchor for Bitcoin. I will probably let the economists and financial experts figure out whatever values they may come up with in their fields. I used to trade stamps, and I see similar market mechanisms with bitcoin or other cryptocurrencies. The rare ones could be golden, while many with abundant quantities may be just worth pennies, such as the stamp’s face value. Market price is determined by supply and demand, with the supply side fixed for bitcoin. Bitcoin has a finite supply, with a maximum of 21 million coins. In other words, the price of bitcoin would have one way to go if the demand holds up. Secular Growth is the story Many believe that the Bitcoin market can grow to $20 trillion in 5 years. This is going to be a significant rate to grow from today’s $2.2 trillion. As indicated in the same reference above, there are globally 200 million Bitcoin accounts (wallets) with about 100 million owners at the moment. So it is not difficult to forecast that the user population may go 10 times as large in the future. The newly passed GENIUS ACT is perhaps the most convincing reason why cryptocurrencies are becoming “officially” the real thing, backed by the US federal regulating framework, aiming to enhance market stability and protect investors. From a market perspective, the growth potential is increasingly reflected in the market. There are 63 Digital Assets ETFs according to Seeking Alpha’s class sorting . Some Bitcoin ETFs have grown to ten billion in AUM. The following is a list of some of the largest Bitcoin ETFs. Notice Strategy ( MSTR ), viewed as a bitcoin proxy, has a market cap exceeding $112 billion. Bitcoin ETFS with billions in AUM (SA) These bitcoin ETFs are expected to grow in size in the next few years, together with the bitcoin market, which could have much bigger space to grow, as indicated earlier. However, the growth pace may vary, and the path may not be a straight line. Show Me the Money, an Income Train is More Important Unlike the old paintings or old stamps, which are typically just for store value, I feel more comfortable investing in Bitcoin when I can see real income streams. Thanks to the equity market, a few income-focused ETFs have been created to generate income while tracking bitcoin itself. These became my main areas of investment quickly. The weekly distribution for YBTC seems to fit my investment strategy for Bitcoin or digital currencies based on the following considerations: Build a cash reserve very quickly and be ready for deployment and/or reinvestment. Bitcoin is very volatile. I need to monitor it carefully; the high distribution is a way to manage the volatility. It is much safer and easier to reinvest in Bitcoin (asset) based on a more friendly backdrop and supportive market conditions. There are other ETFs designed for different purposes, e.g., ultra-leveraged in both bear and bullish sentiments. So I can opt to use the cash raised from the weekly distribution to seek outsized capital gain during a bullish trend; conversely, I can hedge positions while the trend turns bearish. This may prove to be important, as the growth path of Bitcoin may be bumpy, as mentioned earlier. I plan to establish an initial position with YBTC and gradually build my bitcoin exposure, as the growth projection may become more convincing over time. The high-income distribution of YBTC is a kind of strategic element in my investment portfolio. Risk Analysis The Bitcoin market is very volatile, as measured by the 30-day IV level of 34.7 for IBIT, which is one of the key underlyings for YBTC. So YBTC is also more volatile than many option ETFs with equity exposures, such as the S&P 500 Index. YBTC may suffer worse impacts from the capped gain or NAV loss for the V-shape bounce in the price move. There is also a fair amount of skepticism about the future of Bitcoin, which is the main cause for its high volatility. Interested investors should keep monitoring the market carefully and choose reasonable entry points, which could potentially make a significant difference in total returns. Bitcoin may face competition from other cryptocurrencies, such as Ethereum, and/or new ones in the future as the cryptocurrencies continue to evolve. The bitcoin market and its growth trajectory could be affected or even altered. These factors could impact the total returns for YBTC. Closing Thoughts Bitcoin is becoming a more legitimate investment tool as its market size surpasses $2.2 trillion. There is a good probability that the market could grow much bigger in the future. The high volatility may still be a holding factor for many investors. Investors can consider the bitcoin option income ETFs like YBTC as an investing alternative. With a weekly high-income distribution, investors could raise cash quickly and build bitcoin positions gradually. I rate YBTC a hold with a buy bias. The hold reflects the impacts of high distribution at 50%, which may affect the price performance to a large degree, and accordingly, the total return could be volatile in the short-term frame.

Source: Seeking Alpha