Summary VistaShares BitBonds 5 Yr Enhanced Weekly Option Income ETF (BTYB) offers income by combining U.S. Treasuries and a Bitcoin options overlay. BTYB targets double the yield of 5-year Treasuries, distributing income weekly, but faces NAV risk if Bitcoin declines or distributions require return of capital. The fund’s synthetic covered call and covered call spread strategies on Bitcoin expose investors to downside during rapid sell-offs, especially with monthly rebalancing. I assign a hold rating to BTYB due to rising term premiums and Bitcoin’s recent 50% decline, but see long-term income potential if held through volatility. Introduction & Thesis Since the institutionalization of Bitcoin entered a new phase back in January 2024, with the approval of ETFs by the SEC, the market has seen numerous investment alternatives in this asset and ingenious combinations when it comes to portfolio construction. Asset managers have been building structured products under the Bitcoin umbrella, or with Bitcoin as a complement, precisely as a result of the asset’s institutionalization. Within this product segment are indexed products, which combine a traditional asset (such as fixed income or equities) complemented by an investment in Bitcoin, to a greater or lesser extent. This is precisely the case of the VistaShares BitBonds 5 Yr Enhanced Weekly Option Income ETF ( BTYB ). Regarding the investment thesis, I believe this is an option worth considering for generating recurring income. The weekly distribution frequency of income may lead to a partial reduced flexibility, and the monetization of volatility via Bitcoin does not protect against the downside in price if it declines, as is currently happening. This, combined with a clear increase in the term premium on the 5-year bond, leads me to remain cautious and to assign a hold rating to the ETF given the current market environment (Bitcoin down 50% and the term premium increasing). ETF Overview The ETF analyzed was recently approved (02/03/2026). It is actively managed and has a net expense ratio of 0.49%, which falls within normal ranges given the strategy and the management it employs. As mentioned earlier, its primary objective is to generate income for investors, placing capital appreciation via NAV growth in a secondary role, and providing a dividend equivalent to twice the annual yield of 5-year bonds, paid on a weekly basis. Fund Website Fund Website The Strategy: US Bonds & Bitcoin Fund Website To achieve its objective of doubling the coupon of the 5-year U.S. Treasury bond, the ETF’s managers follow a strategy in which they state that approximately 80% of the assets are invested directly in U.S. Treasury securities or indirectly through U.S. Treasury futures and ETFs (which, naturally, provide exposure to that segment of the curve). In any case, the common rule is that these holdings have a remaining maturity between 3 and 7 years, which constitutes the core layer of the strategy. Fund Website The additional return they seek to generate comes through an options strategy on Bitcoin with maturities ranging from one month to one year. In this way, approximately the remaining 20% of assets are allocated to the options operational component, referred to as a “Synthetic Covered Call Strategy.” To implement this strategy, they first state that Bitcoin is not acquired directly. Instead, the initial step is to create a synthetic position by buying a call and selling a put with strikes at (approximately) the same level, in order to replicate the movements of the underlying asset. On top of this synthetic long position, they can apply two strategies: Covered Call Strategy : the objective of this strategy is to collect a certain premium while retaining the option to capture some upside. In this way, the maximum gain is capped, while the maximum loss (net of the premium received) remains exposed. This is a very important point, as it represents one of the main risks highlighted: Fund Website Covered Call Spread Strategy : this strategy is similar to the previous one, with the difference that it adds the purchase of another call option with a higher strike. In this way, the fund gives up part of the premium income, but in return regains exposure to upside performance above the higher strike and remains neutral between strikes. Likewise, it shares the same downside risk as the previous strategy, with the additional consideration that the premium cushion is smaller. Here, the main criticism of the Covered Call Strategy and Covered Call Spread Strategy lies in the monthly rebalancing frequency they apply. Ultimately, the fund seeks to maintain a weekly distribution for the investor through the core layer plus the additional income from option premiums, which is fine. However, in my experience, sell-off events in this type of asset tend to be very fast and of large magnitude. This can lead to an imbalance, in which the premium collected is insufficient relative to the losses associated with the price decline. With a “normal” monthly rebalancing frequency, this leaves the investor exposed during such periods. Nevertheless, and once the operational mechanics have been broken down, it becomes clearer that this is an instrument to be held over the medium and long term, since these events tend to represent short-term volatility, and if the position in BTYB is maintained, the most logical outcome is that the recurring income ends up compensating, allowing us to generate returns by holding the position. Finally, it should be added that the objective of doubling the yield of the 5-year bond is not guaranteed, and it is possible that distributions may include return of capital (ROC), negatively affecting the NAV while at the same time representing a tax advantage for investors who prefer to defer taxation until the time of sale. The Holdings Fund Website Fund Website Among its holdings, we find the portion corresponding to U.S. Treasuries (CUSIP 91282CPW5 ) with a maturity of 01/31/2031 and an annual coupon of 3.75%, which currently makes up the bulk of the portfolio at 82.49%. The other part of the holdings, corresponding to the options strategy, shows that they have currently constructed the synthetic exposure through an ITM call, representing 14.47%, and that the options strategy they are currently implementing is a covered call spread, in which they are selling a call and buying another call with a higher strike. Blackrock Currently, they are collecting a premium of $0.290 per share (0.565 − 0.275), but the current price of IBIT is $36.10, which implies that the strategy is currently in negative territory. Bitcoin Drivers NewHedge In the 30-day rolling window, the correlation between Bitcoin and TLT (the + 20-year U.S. Treasury bond ETF) is highly unstable and can serve as a regime thermometer. When the correlation turns positive, Bitcoin behaves like a “duration” asset that is sensitive to the discount rate, where increases in real yields or an expansion of the term premium can put downward pressure on its price (as is currently happening). When the correlation turns negative, investors seek refuge in long-duration bonds (TLT rises) while reducing exposure to high-beta assets such as Bitcoin. In the current environment of a rising term premium, a positive 30-day BTC–TLT correlation would imply that the main headwind for Bitcoin is not only the prevailing market sentiment (a 50% decline), but also the re-pricing of duration that is taking place. checkonchain The previous metric (Estimated Avg Production Cost) is very useful for analyzing miners’ profitability during periods of market stress. The area shaded in red represents the hash ribbon inversion, which is the variable that identifies periods in which Bitcoin network miners become unprofitable and begin to shut down their mining machines in order to reduce costs. This signal is calculated based on the crossover of moving averages of the hashrate, and for that reason it can appear even when the price of Bitcoin is above the cost of production (the purple line). Nevertheless, under normal circumstances, miner capitulation tends to begin when the production cost rises above the market price. Historically, this has corresponded to periods of heightened volatility, which coincide with sharp declines that ultimately translate into buying opportunities. In the most recent period, what we observe is that miners have been shutting down their machines since November 2025. This has a negative effect on the network, as it reduces both mining competition and network security. In addition, it also suggests that miners are selling in order to finance their operations, which increases supply pressure, and in the absence of sufficient demand to absorb it, the price tends to move lower. The current situation of Bitcoin (at the time of writing) is not the most favorable framework for the fund’s current options position, since if the trend continues and they wish to maintain their distribution objective, they may need to use ROC, which would erode the NAV in the coming weeks. Nevertheless, the positive aspect is that, based on the metric, we are facing a buying opportunity, and the only thing left to do now is to wait for Bitcoin to reach an equilibrium (most likely within the next 1–3 months), consolidate, and regain strength to move higher again. We should also keep in mind that if what follows the decline is a period of sideways consolidation, these are precisely the moments in which the options strategies perform best. In addition, the idea behind this ETF is to hold it over the long term, which should ultimately allow these episodes to balance out over time. Bonds Drivers StreetStats StreetStats One of the main return drivers of the ETF is the yield of U.S. Treasury bonds with maturities in the 3–5 year segment. This yield is directly influenced by short-term interest rates and by the evolution of the term premium over the same horizon. In this case, we have selected the 5-year term premium as a measure of risk for the bonds held by the fund. As can be observed in the previous charts, across all timeframes except the 1-day, term premia for bonds with different maturities have increased, especially over the last three months. These increases mean that the market is demanding higher compensation for assuming duration risk. This may stem from greater uncertainty around inflation or growth, or from an increase in fiscal risk. From my point of view, I believe that both factors are contributing to the up about 18 bps (from 0.25% to 0.43%) in the 5-year bond term premium over such a short period of time (from November 2025 to today). From the ETF’s perspective, this increase improves future carry, as newly issued bonds will pay a higher coupon influenced by the increase discussed. At the same time, however, it can make high-beta assets such as Bitcoin more volatile, negatively impacting the NAV if Bitcoin itself declines. For this reason, I recommend holding the vehicle for the time being. I believe that, over the long term, it will perform well as an income asset within a portfolio. Thank you for reading.
