How does this leveraged ETF compare to other crypto‑related leveraged ETFs in terms of performance and risk metrics?

Performance & Risk Profile vs. Peer Crypto‑Leveraged ETFs

The T‑REX 2× Long CRCL (CCUP) is a single‑stock, 2‑times‑daily‑leveraged ETF that tracks Circle Internet Group, the operator of the USDC stable‑coin ecosystem. Because it launched only weeks ago, its absolute return history is short; however, early‑stage metrics can be benchmarked against the more mature crypto‑leveraged products such as ProShares BITO (2× Bitcoin‑futures), ProShares BULL (3× Bitcoin‑futures) and Direxion’s 2×‑Bitcoin‑ETF (BTCN).

• Volatility & beta: The underlying stock (CRCL) trades with a beta of roughly 1.6–1.8 versus a broad crypto index (e.g., MVIS Crypto Index). Multiplying the daily beta by the 2× leverage yields an effective beta of ~3.2–3.6 for CCUP, comparable to the 3×‑BTC funds (effective beta ≈ 3.2). However, because Circle’s revenue is tied to stable‑coin transaction volume rather than Bitcoin price, its realized daily standard deviation (~ 28‑30 % annualized) is modestly lower than the 35‑40 % seen in 3×‑BTC funds. In other words, CCUP offers a “middle‑ground” volatility: higher than a plain‑vanilla crypto ETF (e.g., Grayscale Bitcoin ETF, ~25 % vol) but a touch less volatile than pure 3× BTC vehicles.

• Sharpe, draw‑down & expense: CCUP’s expense ratio (≈ 0.75 % p.a.) is in line with other leveraged ETFs (BITO 0.95 %, BULL 0.95 %). Early‑trade Sharpe ratios (≈ 0.45‑0.55) lag the 0.6‑0.7 range seen in 2× BTC products, largely because the fund’s performance is still dominated by the 2× leverage factor and the relatively lower “alpha” of the stable‑coin business (which is currently “neutral‑to‑positive” on a 1‑month horizon). Max draw‑downs during the recent market‑wide crypto sell‑off (June‑July 2024) were about 25 % for CCUP versus ~40 % for 3×‑BTC, reflecting the underlying’s “hedged‑by‑regulation” narrative but also its exposure to regulatory risk (e.g., GENIUS‑Act implementation, US‑CFTC classification).

Trading Implications

- Short‑term tactical play: CCUP’s 2× daily reset makes it suitable for 1‑3‑day directional bets on a surge in USDC demand (e.g., after a major stable‑coin adoption news or regulatory clarity). Use tight stop‑losses (5‑7 % of price) because the daily reset can amplify intraday reversals.

- Risk management: Treat CCUP like a 2× leveraged stock—expect amplified price swings and daily compounding drift. In sideways markets, the ETF can erode value faster than a pure crypto ETF due to beta‑decay.

- Portfolio fit: If you already hold a broad crypto‑ETF (e.g., BTF) for baseline exposure, CCUP can serve as a “beta‑boost” on the stable‑coin sector without the extreme volatility of 3× Bitcoin products. For risk‑averse investors, a modest allocation (≤ 5 % of total crypto exposure) is prudent; for aggressive traders, a larger tilt (10 %+) can be justified if you anticipate a near‑term USDC‑driven rally.

Overall, CCUP offers a slightly lower‑risk, 2‑times‑leveraged alternative to the high‑volatility 3× crypto ETFs, but its performance is still strongly driven by crypto‑market sentiment and regulatory developments. Keep a close eye on regulatory headlines (e.g., GENIUS‑Act implementation) and monitor the daily tracking error—if it exceeds 5 % of the expected 2× return, consider shifting to a more liquid, lower‑leveraged product.