Introduction
A novel Bitcoin ETF proposal aims to capture cryptocurrency gains exclusively when U.S. markets are closed. The Nicholas Bitcoin and Treasuries AfterDark ETF, filed by Tidal Trust II with the Securities and Exchange Commission, would switch between Bitcoin exposure and short-term Treasury holdings based on trading hours. This innovative structure directly responds to market data indicating that Bitcoin’s most significant price movements often occur outside traditional market sessions, offering a hybrid investment vehicle that blends crypto volatility with traditional safe-haven assets.
Key Points
- The ETF switches between Bitcoin exposure (after hours) and U.S. Treasuries (daytime), creating a unique day/night asset allocation structure.
- It uses derivatives and existing Bitcoin ETFs rather than holding Bitcoin directly, differing from approved spot Bitcoin ETFs.
- The proposal responds to observed market patterns where Bitcoin often experiences significant price moves outside traditional U.S. trading hours.
The AfterDark ETF's Day-Night Strategy
The core innovation of the Nicholas Bitcoin and Treasuries AfterDark ETF lies in its time-based asset allocation. According to the SEC filing, the fund would hold short-term U.S. Treasuries during the standard U.S. trading day. When markets close, its exposure would shift to track Bitcoin’s performance. This design intentionally mirrors Bitcoin’s overnight return profile for U.S.-based investors, creating a product that is effectively long Bitcoin when the New York Stock Exchange is dark and long government bonds when it is open. The goal is to capitalize on a specific market observation highlighted by Bloomberg Intelligence Senior ETF Analyst Eric Balchunas, who noted on social media platform X that most of Bitcoin’s gains historically occur “after hours.”
This structure represents a significant departure from the spot Bitcoin ETFs approved by the SEC last year. Unlike those funds, the AfterDark ETF would not hold Bitcoin as a direct underlying asset. Instead, the filing states it aims to track Bitcoin’s performance through a combination of futures contracts, options on indices, and by investing in the existing spot Bitcoin ETFs themselves. This derivative-based approach, coupled with the Treasury holdings, creates a unique risk and return profile tailored for investors seeking targeted exposure to Bitcoin’s volatile overnight sessions while maintaining a defensive posture with Treasuries during the day.
Responding to Market Patterns and Industry Evolution
The ETF’s proposal is not born in a vacuum but is a direct response to observable trading patterns in the cryptocurrency market. Recent weeks have seen Bitcoin sell-offs deepen around 9:30 a.m. ET, coinciding with the New York market open. This dynamic has sparked commentary from market participants like entrepreneur Lark Davis, who questioned in November if “someone disable[d] the buy button for Americans” as Bitcoin prices fell at the day’s start. The AfterDark ETF structurally sidesteps this perceived daytime pressure by shifting exposure away from Bitcoin during these hours, betting instead on the cryptocurrency’s historical strength in the overnight session.
Eric Balchunas’s commentary underscores the broader significance of this filing. “[The] bigger takeaway here is the ETF industry is going to try everything,” he stated. This product exemplifies the financial industry’s relentless innovation in packaging cryptocurrency exposure into regulated, familiar investment wrappers. Following the landmark approval of spot Bitcoin ETFs, issuers are now exploring more nuanced and specialized strategies. The AfterDark ETF tests the market’s appetite for products that isolate specific segments of Bitcoin’s price action—in this case, its after-hours performance—rather than offering blanket exposure.
The Players Behind the Proposal and Market Context
The filing comes from Tidal Trust II, an entity associated with Tidal Financial Group, which describes itself as a provider of “white label ETF solutions.” The filing prominently features branding for “XFunds by Nicholas Wealth.” XFunds markets its products with a modern twist, billing them on its website as “not your grandpa’s bond fund” alongside stylized imagery, suggesting an aim to attract a contemporary investor base. Tidal Financial Group is not new to the crypto-adjacent space; it already manages an actively traded fund on the NYSE under the ticker symbol “BLOX,” which provides exposure to blockchain-related companies including trading platforms, payment processors, and crypto miners.
The proposal enters a market where Bitcoin’s price remains dynamic. At the time of the filing, Bitcoin was trading around $92,700, reflecting a 1.6% daily increase but a nearly 4% decline over the preceding year. This volatility underscores the potential appeal of a fund that pairs crypto exposure with the stability of U.S. Treasuries. If approved, the Nicholas Bitcoin and Treasuries AfterDark ETF would represent a novel fusion of traditional finance (TradFi) and cryptocurrency, offering a structured way to navigate Bitcoin’s distinct intraday rhythms while providing a built-in hedge during U.S. market hours.
📎 Related coverage from: decrypt.co