Nicholas Financial Files for Bitcoin ETF That Only Trades After Hours – Here’s Why

TLDR

• Nicholas Financial filed with the SEC to launch the Nicholas Bitcoin and Treasuries AfterDark ETF that holds Bitcoin only during overnight hours
• The ETF would buy Bitcoin at 4 p.m. ET when US markets close and sell by 9:30 a.m. ET before markets reopen
• During US trading hours, the fund would shift assets into short-term US Treasuries and cash equivalents
• Data from Velo.xyz shows Bitcoin tends to perform better when traditional US markets are closed versus when they’re open
• ETF analyst Eric Balchunas confirmed similar patterns existed in 2024, suggesting spot ETFs or derivatives positioning may be having an impact

Nicholas Financial Corporation has filed paperwork with the US Securities and Exchange Commission to launch a Bitcoin ETF with an unusual strategy. The fund would only hold the cryptocurrency during off-market hours.

The proposed Nicholas Bitcoin and Treasuries AfterDark ETF would buy Bitcoin at 4 p.m. ET when US stock markets close. It would then sell its Bitcoin holdings by 9:30 a.m. ET the next day before markets reopen.

During regular US trading hours, the fund would move its assets into short-term US Treasuries and other cash equivalents. This approach aims to capture Bitcoin’s price movements that happen overnight while avoiding daytime volatility.

The filing submitted to the SEC by Tidal Trust II included a Form N-1A registration statement. The document outlined how the ETF would operate using either Bitcoin futures or other Bitcoin investment vehicles.

When using Bitcoin futures, the fund would trade these instruments during US overnight hours. It would close out positions shortly after the US market opens each trading day.

When using Bitcoin investment funds, the ETF would purchase securities at US market close. It would then sell the positions around US market open to capture overnight price movements.

Data Shows Bitcoin Performs Better After Hours

The strategy is based on real trading data that shows a pattern in Bitcoin’s price movements. Analysis from crypto platform Velo.xyz reveals Bitcoin tends to gain more value when US markets are closed.

Over the past year, Bitcoin was more likely to be in positive territory during off-market hours. The cryptocurrency showed weaker performance during regular US trading sessions.

ETF analyst Eric Balchunas reviewed the filing and referenced similar research from last year. He found that most Bitcoin gains occurred after trading hours in 2024 as well.

Balchunas suggested the pattern might be related to spot Bitcoin ETF activity. Derivatives positioning based on ETF flows could also play a role in the overnight price movements.

The analyst noted that an “After Dark” Bitcoin ETF could potentially deliver better returns by focusing on these overnight periods. The strategy allows investors to participate in Bitcoin’s gains while sitting out the more volatile daytime trading.

Nicholas Financial also filed paperwork for a second product called the Nicholas Bitcoin Tail ETF. The wealth management firm is seeking to offer both products to investors.

The SEC filing does not guarantee approval for either ETF. The regulatory agency will review the applications and may request changes before making a decision.

The SEC has previously approved various crypto investment products. These include Bitcoin and Ether futures ETFs, spot digital asset ETFs, and staked crypto ETFs.

US spot Bitcoin ETFs saw record outflows in November with about $4 billion withdrawn. BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund led the redemptions as two of the largest funds in the market.

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