A newly introduced crypto ETF in the U.S. is drawing significant interest, signaling a growing appetite among investors for diversified digital asset exposure beyond single-token funds.
Launched on June 17, the Nicholas Crypto Income ETF, trading under the ticker BLOX, blends digital asset investments with options-based income strategies. Since hitting the market, the ETF has accumulated about $4.52 million in net inflows, raising its total assets under management to nearly $4.9 million, according to VettaFi data and information published by the fund itself.
“The options income segment is becoming almost a standalone asset class,” said David Nicholas, CEO of XFUNDs, speaking with CoinDesk. He emphasized that the fund is attracting yield-hungry retail investors who want exposure to crypto markets while earning additional income.
A Three-Segment Approach
BLOX, developed in partnership with Tidal Investments LLC, operates using a three-part investment model:
- Equity Holdings: BLOX invests in publicly traded companies connected to the crypto industry, such as firms developing blockchain technology or those holding digital assets on their balance sheets.
- Crypto ETF Exposure: The fund allocates capital to bitcoin and ether ETFs and maintains the flexibility to include other crypto assets as new regulated products become available. As of Thursday, the ETF’s key holdings included BlackRock’s spot Ethereum ETF, Coinbase, Nvidia, Marathon Digital (MARA), and Core Scientific. This strategy ensures BLOX’s performance isn’t solely dependent on bitcoin’s price swings.
- Options Strategies: BLOX generates extra income through options trading, selling call and put spreads related to its crypto ETF positions, and writing covered calls or put spreads on its equity investments.
“We own stakes in about 11 different companies that stand to benefit from the growth in bitcoin or ether prices, but they’re not crypto tokens themselves,” Nicholas explained. “This allows investors to gain both direct digital asset exposure and investment in publicly traded firms with real revenue and growth prospects. That’s what sets this ETF apart.”
Using Options to Boost Returns
A significant feature of BLOX’s strategy is income generation through options. Selling options contracts allows the ETF to collect premiums, similar to earning fees for taking on market risk.
In particular, selling put spreads enables the fund to earn additional income when the underlying assets increase in value. BLOX also trades options tied to spot crypto ETFs, including contracts linked to BlackRock’s spot bitcoin ETF (IBIT).
For instance, Coinbase—one of BLOX’s top equity holdings—rallied over 14% in the last week of June. BLOX was able to benefit from both the share price surge and the income earned from its options positions. Core Scientific, another holding, rose around 15% in recent trading.
“The beauty of put spreads is that there’s no ceiling on gains. A put spread is inherently a bullish trade,” Nicholas noted. BLOX distributes income generated from options premiums and dividends from equity holdings to investors weekly.
While crypto traders have long utilized options strategies such as put spreads and high-strike calls on offshore exchanges like Deribit, these techniques are increasingly finding favor in the ETF market and among equity investors.
Room for Broader Crypto Exposure
BLOX may expand into other cryptocurrencies in the future if regulations allow.
“Should the SEC approve other products—like a Solana ETF—we’d simply amend our existing fund to include them,” Nicholas said. “There’s no need for a new ETF, since BLOX is structured to deliver broad crypto exposure and can incorporate new assets as they come online.”
