Summary BLOX ETF has a complex, actively managed structure blending crypto, crypto equities, and tech, delivering a 33%+ annualized distribution and outperforming Bitcoin in total return. The fund’s high turnover, double-layered costs, and discretionary selection result in a 0.99% expense ratio and significant short-term capital gains exposure. With over 65% crypto exposure and 35% in miners/crypto infrastructure, BLOX exhibits high beta and strong correlation to tech, amplifying both upside and downside risk. I rate BLOX a BUY, favoring its strategic participation and total return potential, while cautioning on transparency and cyclical miner exposure. We can say what we want, but without opening BLOX, from the outside we see a fund that has distributed over 30%, participating in the crypto and tech market with a total return higher than Bitcoin. That said, it makes sense to question the reason, and yes… at this point it makes sense to open it from the inside. And the question I personally ask myself is: can it be an income oriented solution to have a weighted exposure to the crypto market, crypto industrial and strategic tech? I was very hesitant, I'm honest, because there's really little transparency here in my opinion. But the way it's set up today… yes. But attention: in my opinion, not a traditional buy & hold. Let me explain better, but first… What is BLOX? Tidal manages $50.52 billion AUM, Nicholas Wealth manages only $757.7 million total AUM, so BLOX represents over 1/3 of Nicholas Wealth's total AUM. What drove this AUM growth? Its peculiarity made it distinctive in less than 1 year of operation: it's an actively managed, non-diversified ETF (1940 Act), that invests in a blend structure 40% BTC / 30% crypto equities index / 30% tech via Taiwan Semiconductor Manufacturing Company Limited (TSM) and NVIDIA Corporation (NVDA) that seems to distribute up to 36% annualized today. BLOX: 1Y performance (Seeking Alpha) It does so with a Physical (holds underlying securities) + Synthetic (uses options for crypto exposure) composition. It doesn't buy Bitcoin/Ethereum directly, but buys spot ETFs, like the VanEck Bitcoin ETF (HODL) and iShares Ethereum Trust ETF (ETHA), and it creates synthetic long via options (long call + short put same strike), so it has a double layer of costs, which is reflected in an expense ratio of 0.99%, so quite high, especially if compared to spot ETFs on Bitcoin and Ethereum. A structure that moreover maintains a 100% turnover, which means every security is changed at least 1 time every year. Which generates transaction costs (even if unitary fee covers some), and short-term capital gains taxed as ordinary income for holders, hardly measurable since there's no benchmark to compare it with. But are all these costs worth it? Maybe. Let's look together. The Distribution But let's dwell on what made this fund distinctive in the market: a TTM distribution of 33.8%. A distribution that seems to be a mix ROC (68%) + NII (32%) + realized gains distributed weekly. In fact the 33% is the result of the calculation on the last weekly distribution (which means this figure can vary significantly from week to week). BLOX: dividend grade (Seeking Alpha) How Is This Result Achieved? For a holding distribution of about 87 holdings, where the top 10 weighs 70% there's a positive idiosyncratic risk anyway. Which amplifies when you notice that today as follows, with a hard crypto exposure in my opinion of about 67%. Then we see at least 25% assets in information technology sector; which summarily with the crypto one determines a clear prevalence of high beta instruments of the S&P 500, moreover with a statistically very high correlation between them. BLOX: top holdings (Seeking Alpha) Reworking the holding distribution, in my opinion there's a distribution of this type in a sector perspective. BLOX: Crypto Allocation (Author) Regarding the options structure, every 2-12 months options expire, require rolling, and today we see about 54 contracts (about 5% in gross notional) with dominant PUT spreads. In detail it seems that almost all equity holdings have protective PUT 1:1. Why? Fund sells puts at lower strike and collects premium (in fact there are very few call options). So a first layer is protective put overlay and if I'm not mistaken with strikes generally 3-10% below current stock price with short dated (7-30 days and continuous rolling). Then there's a second layer of short PUT at higher strike than long PUTs. Collects premium (classic) where apparently (at least today) downside is limited to strike differential, upside is zero. Then lastly the calls (in minority), I glimpsed Robinhood Markets, Inc. (HOOD) with a deep ITM call, the Fidelity Wise Origin Bitcoin Fund ETF (FBTC) with a sort of call spread, and ETHA another call spread, but I repeat, they count little. Then it has a meta-strategy via the Nicholas Bitcoin and Treasuries AfterDark ETF (NGHT) and the Nicholas Bitcoin Tail ETF (BHDG) (12% allocation). The first serves to Trade Bitcoin 24/7 (crypto never closes, unlike equities). Exploit overnight moves, Asia hours volatility. The second does additional tail hedge with buy long-dated PUT options on Bitcoin as disaster insurance. In short a much more complex structure both as you see it at first impact in my opinion, and not so in line with the strategy that I seemed to have appreciated in the prospectus. It deserves a comparison with peers. Peers If the objective is distribution, then it deserves in my opinion a good comparison with other solutions on the crypto market that move in this direction, but use a classic buy write strategy. And I therefore introduce this peer comparison, with an ETF I've already covered in the past: the YieldMax Crypto Industry & Tech Port Opt Inc ETF (LFGY). BLOX has a crypto exposure in my opinion higher than 65%, against little more than 40% of LFGY. And while the first manages to have a distribution higher than 30%, LFGY even exceeds 70% (we're talking about extreme figures), a situation that in my opinion deserves comparison. Because the first strategy is based on call spreads, allows upside participation while the second is a covered call strategy. What results have they brought? BLOX - LFGY: Total return (Seeking Alpha) As I expected, in expansive market phases, solutions like BLOX leave more room for the price to maintain an anchor to the underlyings. Vice versa, covered call solutions like LFGY that have a strong cap on the upside don't. Result, in an expansive market phase BLOX will be preferable compared to LFGY, but in a contractive phase, exactly the opposite is true, and the comparison between price returns clearly demonstrates it in my opinion. BLOX - LFGY: Price Return (Seeking Alpha) What to Expect? On the crypto market, and the tech one I have a common vision, which I shared respectively here , and here . And it's based on 2 assumptions: Political reasons: Donald Trump's moves, including pressures on the Fed to lower rates, the introduction of tariffs, also on the recent auto sector, entry into Venezuela, and the conflict in the Middle East… but not only, also fiscal maneuvers, seem to direct the macro flow toward greater inflation. A path accompanied by revolutionary regulatory processes like the GENIUS and CLARITY Act. Elements that summarily lead to a devaluation of US debt, an element that in my opinion validates both stocks with growing profit margin, and in the tech sector growth in profit margin above 2% is expected (After a 70% increase in CapEx). But also rare assets, like Bitcoin is after all, which anyway has a controlled supply. A second reason lies precisely in this controlled supply: the role of scarcity in Bitcoin's price action has detached at this moment. That is, descriptive models like STF don't seem to work. But in my opinion this discordance is not lasting. Which means it could be accumulating unexpressed values. So on instruments like BLOX that somehow mix these two macro sectors the prospects are optimistic. Similarly, considering the contribution of capital gain in the return models of the tech and crypto sector, I think that NON covered call solutions, like BLOX can maintain a more competitive total return than others like LFGY. What I Don't Appreciate At All (Risk) That over 35% is occupied by miners and crypto infrastructure. These are two sectors that are not growth: miners specifically, have a cyclical trend, dictated precisely by Bitcoin's cycle. And in my opinion, an asset to avoid in portfolio, and I talked about it here . BLOX: Allocation Breakdown (Author) I think inserting miners is wrong because their high-beta function of cyclicals cancels the benefits of the previous cycle. In bullish cycles miners rise 2.5x Bitcoin but also in bearish cycles Miners fall 2.5x Bitcoin but Distributions (36%/year) are paid always, even in decline and PUTs in theory protect in flash crashes, less in gradual declines. At least this is a conclusion I draw from my personal experience. To this is added a worrying correlation (above 0.85) with the tech market. So in risk-off regimes, the entire portfolio collapses, and one part, that of miners, has in my opinion fewer chances to recover quickly. My Opinion That said, overall the fund has shown an interesting balance between the total performances of BTC and NDX, and you understand it by inserting it in a performance chart with total returns. BLOX: total return (Seeking Alpha) The logic, to smooth out a bit the effect of miners, in my opinion should be that of a strategic participation, in terms of market timing. An element that I personally achieve on the advanced chart applying an RSI at 14 periods on tf 1W. BLOX: Advanced Chart (Seeking Alpha) This helps me maintain a minimum load price, and smooth out the cyclicality that risks being created inside BLOX. For this today I think the right rating is BUY given the proximity to a zone of interest in April. Conclusion We're talking about an ETF with a very complex actively managed structure, and I must admit it's not too transparent. But today it brings competitive results that place themselves between Bitcoin's performance and that of NDX, distributing anyway over 30%, decidedly above average. Personally I don't appreciate much the strong exposure to the crypto industry market, segment of which I appreciate very little, if not some projects like stablecoins . But considering the application of a strategy that smooths out entries, and my aggregate vision on BLOX's holdings, I think the right rating is BUY.
