Executive of Themes ETFs Talks About Launching New 2X Coinbase Fund: “We are Confident that Increasing Bitcoin Prices will Benefit all Cryptocurrencies”

My parents used to brush off Bitcoin as “imaginary internet money”, but now they’re more curious than ever about how to invest in this digital currency. The introduction of a 2x long Coinbase ETF this week highlights Wall Street’s response to the growing interest from traditional equity investors.

For my parents, owning cryptocurrency directly isn’t an option, and likely, many others feel the same way. However, there is a clear appetite among investors for Wall Street-based exposure. Last year, I recommended the first Bitcoin ETF (Purpose Bitcoin ETF), and in mid-2024, I advised buying shares of Robinhood.

Both strategies proved to be quite lucrative, although the Bitcoin ETF did experience significant fluctuations, leaning more towards the downside for a period.

As spot Bitcoin and various altcoin ETFs surge, digital assets are moving further into mainstream finance. Indeed, there’s a noticeable shift. Even cautious investors, like my retired parents with lower risk tolerance, are beginning to embrace the notion of increasing their crypto exposure.

That’s why the launch of the Leverage Shares 2X Long Coinbase ETF (Ticker: COIG) caught my attention when it started trading on Nasdaq this week. Offered by Themes ETFs, COIG aims to deliver double the daily performance of Coinbase stock (COIN), a leading name within the U.S. crypto infrastructure.

This isn’t a straightforward wager on the performance of a specific cryptocurrency or the market overall; instead, it’s a way to express confidence in Coinbase as the primary exchange for both retail and institutional cryptocurrency investors. The rationale is clear: Coinbase’s revenues increase when more individuals invest in and trade cryptocurrencies.

Leveraged ETFs like COIG aren’t standard long-term investments. They are designed for traders looking to amplify short-term market movements, whether it’s to capitalize on a rally, hedge an existing investment, or simply ride the momentum.

Like all leveraged ETFs, these are not tools for a “set it and forget it” approach. Investors unaware of how daily resets and compounding can influence returns may end up disappointed, facing losses even as the underlying asset rises gradually.

To gain more insight into how COIG operates, why Themes ETFs chose to launch it now, and what lies ahead, I spoke with Paul Marino, Chief Revenue Officer at Themes ETFs.

Below is a transcript of our discussion:

The COIG ETF debut coincides with recent declines in both crypto and equity markets. What gives you confidence that this is the right moment to introduce a 2X long Coinbase ETF (the stock is down 25% year-to-date)? Are you observing any specific market trends or shifts in investor demand that validate the launch timing?

We maintain a bullish long-term outlook on Bitcoin and cryptocurrencies, believing Coinbase will prosper as one of the largest and most secure crypto platforms globally. COIN enjoys significant trading interest and volume, and the decision to launch COIG wasn’t a bid to time the market’s upswing; rather, it’s about providing retail and professional traders with a leveraged opportunity within a daily liquid ETF structure.

How should a leveraged product like COIG be integrated into an investor’s overall portfolio? What should traders anticipate during times of rapid price fluctuations (both up and down) in Coinbase stock, and how should it be balanced with core long-term investments?

For active investors seeking to leverage their Coinbase exposure, COIG offers a straightforward option without margin requirements or the use of options. The aim is to provide 200% of the daily performance of COIN. Due to the daily reset characteristic of leveraged ETFs, we advise against holding them over extended periods; instead, they should be used strategically to leverage expected significant movements or to hedge short positions.

While Coinbase stock is poised to benefit from increased crypto adoption, its performance doesn’t always correlate with Bitcoin prices. How should investors consider the relationship between COIG and broader crypto market trends?

With the rise of crypto adoption in the U.S. and globally, COIN stands to gain as a premier platform. We don’t view it as a direct correlation with Bitcoin, yet we believe that as Bitcoin’s tide rises, it will elevate all cryptocurrency investments. Again, we maintain a positive long-term perspective for both crypto and Coinbase.

While leveraged ETFs can seem exciting, many investors lack an understanding of the underlying mathematics. Due to daily compounding, a 2X fund could lose value even if the underlying stock remains relatively flat. What critical risks should investors be aware of before trading COIG (or any 2X fund)?

Every investment carries risks, and we advise all investors to fully comprehend the instruments and securities they are dealing with before trading. In simple terms, while leveraging opens up more upside opportunities, it also increases downside risk if the stock declines. We discourage a “set it and forget it” mentality with these products. Additionally, due to the daily reset, a trader might risk losing capital in a volatile or stagnant market.

The prospectus specifies that these funds are meant for “knowledgeable investors.” Can you clarify what constitutes a “knowledgeable” investor?

We believe it’s crucial for all investors and traders to understand what they are investing in and the associated risks.

We’re seeing a surge in institutional crypto adoption, with many investors (including my parents) planning to increase their crypto allocations. Many are inclined to use more familiar vehicles like equities and ETFs instead of holding crypto directly. How does this trend affect the crypto ETF landscape, and do you view your COIG offering as “competing” with direct crypto investments?

COIG is a leveraged ETF with the underlying security linked to crypto. It doesn’t represent a “crypto” investment like a spot Bitcoin ETF would, nor does it hold actual coins. It simply provides a means to achieve 2x exposure to Coinbase, in either direction, through a daily liquid ETF structure. Coinbase acts as a proxy for both crypto and Bitcoin.

How is Themes ETFs positioning itself and distinguishing its products within the leveraged ETF space? I noticed that the expense ratio is set at 0.75%, which is among the lowest for its kind. What other advantages does Themes bring—whether in structure or strategy—that could persuade investors to opt for COIG over alternatives?

The expertise of our management team and our low fee structure set us apart, and we are starting to see increasing daily volumes and flows as more traders recognize the reliable and cost-effective alternative we offer.

What can you share about Themes ETFs’ future roadmap for crypto and the products in the pipeline? Are there additional themes or sectors within the crypto ecosystem that you plan to explore?

The ETF market is dynamic, and we are continuously seeking to provide innovative and first-to-market products that cater to traders and investors’ needs. We do have plans for additional crypto-related products, which we will be announcing shortly.