Summary Leverage Shares 2X Long CRCL Daily ETF (CRCG) is best used as a tactical, intraday trading instrument due to volatility drag. CRCG's structure relies on swaps and options for synthetic exposure, with no direct CRCL share ownership and collateral requirements up to 100%. Circle (CRCL) shows strong fundamentals: $694 million revenue (+20% YoY), $151 million adjusted EBITDA (+24% YoY), and 63% USDC market share. I rate CRCG as HOLD; (IMO) extreme volatility limits holding periods, but positive momentum and partnerships could enhance tactical appeal if volatility subsides. The Leverage Shares 2X Long CRCL Daily ETF (CRCG) fund was launched approximately 2 months after Circle Internet Group, Inc.'s (CRCL) IPO and captured the POST-HYPE phase of Circle's IPO; a perfect moment to remind everyone of a lesson: 2x leverage instruments with daily replication can destroy capital if held beyond the day. And although even today on CRCG you can still taste the weight of CRCL's collapse, this doesn't mean that CRCG is an instrument to avoid, nor that CRCL is a terrible investment in my opinion. On the contrary, if used with discretion in my view, CRCG can become a tactical portfolio instrument, while CRCL an interesting asset to monitor. But before introducing my thesis... What is CRCG? It's an actively managed ETF with 2x leverage factor on a daily basis on the daily performance of Circle Internet Group's common stock. The objective is valid ONLY for holding periods of 1 trading day; for longer periods, the return mathematically diverges from 2x of the underlying due to the compounding effect. If held for longer periods, this would experience volatility drag and take on significant risk, as explained here . CRCG: 1Y performance (Seeking Alpha) The fund's TER is 0.78% but the real cost would derive from the classic volatility drag effect: Daily rebalancing creates a systematic "buy high, sell low" pattern. If CRCL moves significantly intraday, the fund's exposure moves away from the 2x target until end-of-day rebalancing and the comparison with CRCL's performance confirms it (CRCG's returns are 3x lower compared to those of CRCL). CRCG - CRCL: Cruise Sector Relative Performance (Seeking Alpha) How Is It Constructed? It uses Swap agreements with major financial institutions for periods from 1 day to >1 year with Deep in-the-money call options on the underlying, Synthetic forwards (buy at-the-money call + sell at-the-money put simultaneously) and FLEX Options (FLexible EXchange Options) with customizable terms (strike, expiration, type) with collateral originally 25-50% of assets, BUT the March 13, 2026 supplement updated to "up to 100% of its assets as collateral for swap agreements or as premiums for purchased options contracts". Therefore the fund does NOT hold CRCL shares directly; at this moment there are 5 holdings representing this position. CRCG: Synthetic Exposure Portfolio Structure (Author) How Are the Peers Constructed? It's not the only 2x leverage product on Circle, there's also CCUP and CRCA. Two solutions that in my opinion at the structure level are not better than CRCG. This for a TER question: in all 3 cases there's a 2X daily replication, so actually if you respected the idea of a maximum daily holding period, the impact in relative terms of the TER is really minimal. But, still in theory, it would simplify if the holding period increased. This considering that in terms of AUM there are no major differences except for CCUP which has much less assets under management, as this table shows. CRCG: ETF Comparison (Seeking Alpha) But What to Expect From Circle? Circle is technically a fintech that issues stablecoins, VettaFi research defines it as "tech-adjacent" together with Coinbase Global, Inc. (COIN) and Robinhood Markets, Inc. (HOOD). Circle is the issuer of USDC, a regulated stablecoin with $30B+ in circulation. That of stablecoins is perhaps the only segment of the crypto industry that I can stand. Companies like Cicle internet group have a business model that at least I can understand and that I consider sustainable. And yesterday's earning call confirms it, because today Circle has Total revenue of $694 million (+20% YoY), Adjusted EBITDA of $151 million (+24% YoY, 53% margin), and a USDC market share equal to 63% of all stablecoin transactions. CRCG: Arc Token Plans (Seeking Alpha) Result of a Transaction volume +263% is an absurd number (almost 3x YoY), with a Meta Platforms, Inc. (META) partnership (creator payouts in USDC) ongoing, signal of the long-awaited mainstream adoption. Real numbers, behind a new business, but concrete and profitable. Technical Evidence The company clearly has a beta linked to that of BTC-USD and the Nasdaq-100 (perhaps more Russell 2000). CRGC: 6M performance (Seeking Alpha) The IPO contraction came together with the fall of BTC-USD from the August 2025 highs of Bitcoin. Following this narrative rhetoric, it's also true that from the February lows of BTC-USD, CRCL shares have indeed recovered ground, in turn more than BTC-USD, somewhat confirming the high beta nature of this financial entity. Almost in view precisely of a repricing in front of guidance expectations. This resulted in a recovery of CRCG from the lows it had reached (amplified), although the performance above the day is naturally not 2x that of CRCL, for the reasons related to the volatility drag we talked about. A pattern also muddied by the typical IPO sequence: 1-3 weeks of pump, followed by distribution that lasts about 5-12 weeks, and then 3-6 months of post pump collapse, where valuations are returning to average. The past was therefore statistically one of the worst moments to participate in 2x leverage solutions. This because from launch risk/reward is negatively skewed; an example of these situations you can find here. In Perspective I think that net of the pullback, the underlying direction is positive for these circuits, with major new partnership (e.g. integration with Apple Pay, Google Pay, Amazon), US stablecoin bill passes with terms favorable to Circle (positive regulatory clarity) considering Trump's Genius Act and in perspective it wouldn't be impossible to expect that USDC circulation passes from $30-$50 billion+ in quarter (massive adoption spike). Element that considering the earning call data, is not so excludable in my opinion. And if this helped to compress volatility below 20% annualized, it would leave room on 2x instruments even for longer-term participations. All the more so if BTC's price should return to maintain bullish tones, element that personally I expect, and I talked about it extensively here . CRCL - BTC Momentum (Seeking Alpha) Risk The worst scenario is that of high volatility sideways market (oscillations around flat level) that precisely generates again, as it has generated from launch a compounding drag (simplified). Also because ultimately Stablecoin regulation is in extreme flux globally: US: No comprehensive stablecoin legislation passed yet and EU with MiCA regulation entered into force 2024, requires licensing for stablecoin issuers. So struggle between two poles, the first very positive because the financial structures of stablecoins that work can be very lucrative, the second regulatory action can have massive downside but limited upside. CRCG: Risk Grade (Seeking Alpha) My Opinion The risks are concrete, but judging from the underlying direction, it seems to proceed more toward positive scenarios, than extremely pessimistic ones like excessive regulation of the sector. In this sense, also considering renewed and positive prospects for these business models and specifically Circle, CRCG would become a tactical solution, especially if BTC-USD's price returned to rise. Yet, volatility today is still too high in my opinion to justify a holding period beyond daily, or at most weekly. But for intraday replication, I think CRCG remains an excellent tactical vehicle. Conclusion I think therefore that the right rating is HOLD. The fund naturally suffers the volatility drag effect, but like every other 2x fund. The intraday replication is linear, and ultimately the fund proposes precisely that. If to this we add the prospects on Cicle, and the momentum cycle it has entered, it becomes a tactical portfolio solution interesting for now due to extreme volatility in my opinion valid not beyond the trading day.
