On Friday, First Trust closed out the week by launching the FT Vest Bitcoin Strategy Floor15 ETF (BFAP).

For its investors, BFAP seeks to provide capped upside to bitcoin's price performance, along with downside security. The fund's net expense ratio currently sits at 90 basis points.

First Trust has launched the FT Vest Bitcoin Strategy Floor15 ETF (BFAP) to provide investors with capped upside to bitcoin’s price performance, along with downside security.

The fund is seeking to offer an interesting take on investing in bitcoin. In the past, several institutions have launched products that aim to provide investors with exposure to the cryptocurrency in a more accessible manner. Earlier this year, for example, BlackRock (NYSE:BLK) made headlines when it filed paperwork for a spot bitcoin ETF.

While those products may offer some advantages, they also come with the potential for nearly unlimited losses, which could be a concern for risk-adverse investors.

To help investors participate in a meaningful portion of bitcoin’s potential upside, while also addressing downside risk, BFAP is applying a modified "floor and cap" strategy, using options to provide limited upside and downside protection.

The fund’s net expense ratio is 90 basis points.

“Over the past few years, investors have shown remarkably strong appetite for bitcoin-linked ETFs, but the potential for sharp drawdowns has kept many on the sidelines,” said Ryan Issakainen, CFA, Senior Vice President, ETF Strategist at First Trust. “We believe this new First Trust ETF will be a useful tool for those seeking to participate in a portion of bitcoin’s potential upside, while also addressing downside risk.”

How It Works

To carry out its investment objectives, the fund’s primary holdings consist of options. The reference assets for these options are the Cboe Bitcoin U.S. ETF Index (BTC.ETFX).

The fund’s options portfolio may include FLEX Options, which are listed put and call options on single stocks or ETFs, typically sold on U.S. exchanges. It may also hold over-the-counter options, or exchange-traded options, such as those sold on Cboe Options Exchange, Inc., and on the Chicago Stock Exchange.

Through the use of options, BFAP is able to give investors access to returns from bitcoin’s price growth. However, the fund’s upside participation is capped. As of April 4th, 2025, that upside cap sits at 34.51% before fees and expenses.

While upside exposure may be subject to a limit, the fund also offers extensive downside security. Across its outcome period, BFAP limits potential losses to 15%, prior to fees and expenses.

Given the relatively volatile nature of bitcoin’s price performance, a risk-adverse bitcoin strategy could pay off in the long term. BFAP can help investors remain engaged in cryptocurrency while hedging against potential volatility.

This is the second bitcoin-focused ETF to join First Trust’s ever-growing lineup. Earlier this week, the firm launched its FT Vest Bitcoin Strategy & Target Income ETF (DFII) (NYSE:DFII). Both ETFs track indexes provided by Vest Financial.

First Trust is a provider of ETFs and mutual funds. The firm currently has more than 30 ETFs listed in the United States. As a whole, these funds represent about $14 billion in assets under management.

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