Odaily reported that 10x Research has raised concerns over BlackRock’s Bitcoin yield-enhanced exchange-traded fund, BITA. According to the firm, the product may have a strategy design flaw because it seeks to generate income by selling call options. 10x Research said this approach may cause investors to underperform spot Bitcoin in most market environments and may also fail to deliver the desired absolute return.
Fixed Monthly Call Selling Draws Scrutiny
10x Research described BITA’s key mechanism as a rules-based strategy that sells call options every month. Selling call options can generate option premium income, but it also limits the investor’s ability to participate fully when the underlying asset rises. In the case of BITA, the underlying exposure is linked to Bitcoin, so the main trade-off highlighted by 10x Research is between collecting income and keeping access to Bitcoin’s upside.
The firm said this trade-off may be unfavorable whether Bitcoin rises, trades sideways, or falls. If Bitcoin moves higher, the call-selling structure can reduce the benefit of that upside. If Bitcoin remains range-bound or declines, the premium collected may still be insufficient to produce an ideal absolute return. On that basis, 10x Research argued that the fixed execution framework used by BITA may not fit every market condition.
10x Research Favors Timing and Conditional Execution
10x Research contrasted BITA’s fixed monthly rules with its own preferred framework, which emphasizes “timing and conditional execution.” Under that approach, option premium would be harvested only when the market environment is favorable, rather than through a mechanical call-selling program that runs regardless of the state of Bitcoin’s price action.
The firm also said Bitcoin’s high volatility mainly stems from information asymmetry among market participants and from a heavily marketed market environment. It added that many investors have long attempted to capture returns from this volatility through systematic strategies, but most have not succeeded. The debate around BITA therefore centers on whether a yield-oriented Bitcoin ETF can balance income generation, execution timing, and participation in spot Bitcoin performance without creating an unfavorable outcome for investors.