First Trust Advisors has launched two Bitcoin (BTC) strategy exchange-traded funds (ETFs) designed to provide investors with Bitcoin exposure while capping losses and earning yield, the asset manager said. 

The move comes amid an outpouring of funds seeking to enhance Bitcoin’s appeal to traditional investors by offering tailored exposure to the cryptocurrency’s performance.

The FT Vest Bitcoin Strategy Floor15 ETF (BFAP) is designed to track Bitcoin’s performance up to a capped upside while limiting drawdown risk to approximately 15%, First Trust said in an announcement.

“Over the past few years, investors have shown a remarkably strong appetite for bitcoin-linked ETFs, but the potential for sharp drawdowns has kept many on the sidelines,” Ryan Issakainen, an ETF strategist at First Trust, said in a statement.

First Trust launched two new Bitcoin strategy funds. Source: First Trust

The FT Vest Bitcoin Strategy & Target Income ETF (DFII) is an actively managed fund aiming to offer partial Bitcoin exposure while generating a yield that beats short-dated US Treasurys by at least 15%, according to the asset manager. 

The DFII fund “will seek to take advantage of bitcoin’s high volatility to generate income by selling call options,” Issakainen said. The BFAP fund also uses financial derivatives to hedge downside risk. 

Options are contracts granting the right to buy or sell — “call” or “put,” in trader parlance — an underlying asset at a certain price.

Related: Trump-linked Strive files for ‘Bitcoin Bond’ ETF

Structured Bitcoin funds

Launched in January 2024, Bitcoin ETFs emerged as one of last year’s hottest investment products. 

As of April 4, spot BTC ETFs collectively manage approximately $93 billion in assets, according to data from Bitbo. 

Bitcoin ETFs saw outflows after US President Trump announced tariffs. Source: Farside Investors

Other types of ETFs designed to offer tailored exposure to Bitcoin’s performance are also gaining popularity. 

On April 2, Grayscale — a cryptocurrency-focused asset manager — launched two Bitcoin strategy ETFs. Like First Trust’s ETFs, they use financial derivatives to optimize for downside risk management and income generation. 

In March, asset manager Bitwise launched an ETF holding stocks of companies with large Bitcoin treasuries. 

Spot BTC ETFs saw nearly $100 million in outflows on April 3 amid the heightened market volatility following US President Donald Trump’s tariff announcement of sweeping tariffs on April 2. 

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Stablecoin firm Circle, the issuer of the USDC (USDC) dollar-pegged token, is reportedly mulling a delay of its initial public offering (IPO) plans amid the macroeconomic uncertainty created by the Trump administration’s trade policies.

According to The Wall Street Journal, “Circle had been nearing its next steps in going public, but is now watching anxiously before deciding what to do,” and joins a growing list of companies considering IPO delays, including fintech company Klarna and ticketing firm StubHub.

Circle filed an S-1 registration form with the United States Securities and Exchange Commission (SEC) to take the company public on April 1.

Circle’s S-1 registration form for its initial public offering. Source: SEC

The stablecoin firm is planning to sell its shares under the ticker symbol “CRCL.” Circle’s prospectus materials have not yet outlined details of the number of shares offered or the initial stock price.

Circle’s potential IPO delay comes amid turmoil in the stock market as trillions in shareholder value dissipated following US President Donald Trump’s April 2 announcement of sweeping trade tariffs and investor fears that a protracted trade war could cause a global recession.

Related: Trump ‘Liberation Day’ tariffs create chaos in markets, recession concerns

Trump’s protectionist trade policies crash markets

Trump’s sweeping tariff order established a 10% baseline tariff on all countries and reciprocal trade tariffs on countries that tax US imports.

Over $2 trillion was wiped away from the US stock market on April 3 as investors pivoted from risk-on assets to less volatile alternatives as a response to the growing macroeconomic uncertainty.

US stocks shed trillions in shareholder value following Trump’s sweeping tariff order. Source: TradingView

The Volatility S&P 500 Index (VIX), a measure of stock market volatility colloquially named the “Wall Street Fear Index,” is currently over 41 — an indication of extreme fear among stock market investors.

Fears of a US recession continue to mount as other countries respond to the Trump administration’s trade policies with counter-tariffs.

ARK Invest founder Cathie Wood voiced concerns over a looming recession prior to the US President officially signing the tariff order.

“We are worried about a recession. We think the velocity of money is slowing down dramatically,” Wood told an audience gathered for the Digital Asset Summit on March 18.

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Blockchain startup Codex has raised $15.8 million to build a layer-2 network specifically for stablecoins, signaling that more builders are rushing to capitalize on the growing industry and regulatory alignment around fiat-backed stable assets. 

The seed round was led by Dragonfly Capital, with additional participation from Coinbase, Circle, Cumberland Labs, Wintermute Ventures and others, Codex told Fortune.

The funding will be used to help Codex build its stablecoin-only platform from the ground up, said co-founder and CEO Haonan Li.

Source: Victor Yaw

Codex has disavowed “general-purpose blockchains” because of their inefficiencies in meeting real-world use cases, said Li. Instead, Codex is building a stablecoin-only chain on top of Optimism, an Ethereum layer-2 scaling solution that uses rollup technology to boost transaction speeds and lower costs.

Although details about the Codex chain were sparse, Li said the stablecoin solution aims to create a predictable fee structure that isn’t influenced by volatile blockchain activity. 

Codex is also aiming to build stablecoin off-ramps with existing cryptocurrency exchanges and local brokers, which would allow users to cash out their onchain assets for fiat. 

Related: Stablecoin adoption grows with new US bills, Japan’s open approach

The stablecoin “hunch” 

In 2023, Li had a “hunch” that stablecoins would be the next major blockchain growth story, which at the time “was a pretty contrarian view among these core crypto people,” he told Fortune. 

Codex co-founder Victor Yaw said the stablecoin market has grown 60 times in the last six years, but still only accounts for less than 2% of offshore US dollar deposits. 

“We haven’t even scratched the surface,” he said.

Stablecoin demand has shown signs of resilience, growing in the face of adverse crypto market conditions. Although crypto markets plunged in the first quarter, stablecoin supplies increased by $30 billion during that period, according to crypto intelligence firm IntoTheBlock. 

The total stablecoin market capitalization now sits at nearly $230 billion. The vast majority of stable assets are backed by US dollars. 

The stablecoin circulating supply has grown by nearly 3% over the past 30 days. Source: RWA.xyz

Codex isn’t the only stablecoin network to emerge from stealth this year. In January, a layer-1 network called 1Money raised $20 million to further develop its stablecoin payment platform. 

1Money’s founder and former Binance.US chief Brian Shroder told Cointelegraph that the future of stablecoins will be “multicurrency,” with stable assets extending beyond the dominant US dollar. 

Growth beyond the US dollar will likely be fueled by “demand for localized stablecoin financial solutions and use cases,” said Shroder.

Related: ‘We’re bullish on stablecoins,’ next-gen DeFi — Coinbase Ventures head