Amid uncertainties surrounding short-term U.S. growth and persistent inflationary pressures, there is a growing demand for investment products that can help investors navigate potential market volatility.
One traditional solution that advisors often recommend in times of rising inflation is gold. This precious metal has historically been a reliable vehicle for mitigating inflation risks due to several factors. Gold not only serves as a robust store of value, but its limited supply and lower correlation with currencies enable it to maintain its appeal, regardless of economic conditions.
However, gold is not the sole option for those seeking a reliable store of value. Bitcoin also embodies these characteristics, sparking an ongoing debate about whether investors should favor gold or bitcoin during inflationary periods.
Both gold and bitcoin can effectively act as hedges against inflation, but they exhibit distinct differences, particularly in terms of long-term growth potential and volatility. These differences highlight the benefits of diversifying investments by incorporating both gold and bitcoin. By allocating resources to both assets, investors can leverage the advantages of each while diversifying their strategies against inflation.
How CBXY Operates as an Inflation Hedge
The Calamos Bitcoin 90 Series Structured Alt Protection ETF – July (CBXY) offers a pathway for investors to access bitcoin through a flexible ETF structure. CBXY employs an options strategy to capture bitcoin’s price performance, with a predetermined upside cap that started at approximately 24% upon its launch in July.
A significant advantage of CBXY lies in its downside protection. Investors are assured that their overall loss will be limited to 10% during the fund’s outcome period, regardless of how far bitcoin may decline. Given the potential for substantial drawdowns in bitcoin’s price, this level of risk management can be invaluable, especially when using bitcoin as a hedge against inflation.
This strategy positions CBXY as a complementary asset within a gold-focused investment portfolio. It allows investors to hedge against inflation while benefiting from the growth potential of bitcoin, making it a valuable tool for risk management. When integrated with a gold strategy, both assets can provide distinct inflation hedges, each contributing unique strengths to the overall investment approach.
For more news, information, and strategy, visit the Crypto Content Hub.
Disclosure Information
Before investing, carefully consider a Fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-866-363-9219. Read it carefully before investing.
The Funds seek to provide investment results that, before taking fees and expenses into account, track the positive price return of the CME CF Bitcoin Reference Rate – New York Variant (“BRRNY”) (“Spot bitcoin”) up to a predetermined upside cap (the “Cap”) while seeking to protect against 100%, 90% or 80%, respectively, of losses (before total fund operating fees and expenses) of Spot bitcoin over a period of approximately one (1) year (the “Outcome Period”). The Funds will not invest directly in bitcoin. Instead, the Funds seek to provide investment results that, before taking total fund operating fees and expenses into account, track the positive price return of Spot bitcoin by investing in options that reference the price performance of one or more underlying exchange-traded products (“Underlying ETPs”) which, in turn, own bitcoin and/or one or more indexes that are designed to track the price of bitcoin (“Bitcoin Index”).
The Target Outcome may not be achieved, and investors may lose some or all of their money. The Funds are designed to achieve the Target Outcome only if an investor buys on the first day of the Outcome Period and holds a Fund until the end of the Outcome Period. While the Funds seek to provide 100%, 90% or 80% protection against losses experienced by the price of Spot bitcoin for shareholders who hold Fund Shares for an entire Outcome Period, there is no guarantee a Fund will successfully do so. If a Fund’s NAV has increased significantly, a shareholder that purchases Fund Shares after the first day of an Outcome Period could lose their entire investment. An investment in the Funds is only appropriate for shareholders willing to bear those losses. There is no guarantee the Capital Protection and Cap will be successful, and a shareholder investing at the beginning of an Outcome Period could also lose their entire investment.
An investment in the Funds is subject to risks, and you could lose money on your investment in a Fund.
There can be no assurance that a Fund will achieve its investment objective. Your investment in a Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in a Fund can increase during times of significant market volatility. The Funds also have specific principal risks, which are described below. More detailed information regarding these risks can be found in the Funds’ prospectus.
Investing involves risks. Loss of principal is possible. The Funds face numerous market trading risks, including authorized participation concentration risk, underlying ETP risk, cap change risk, capital protection risk, capped upside risk, cash holdings risk, concentration risk, clearing member default risk, correlation risk, costs of buying and selling fund shares, counterparty risk, derivatives risk, equity securities risk, FLEX options risk, interest rate risk, investment in a subsidiary, investment timing risk, liquidity risk, management risk, market maker risk, market risk, new fund risk, non-diversification risk, options risk, OTC options risk, position limits risk, premium-discount risk, secondary market trading risk, sector risk, tax risk, trading issues risk, U.S. Government security risk, U.S. Treasury risk, and valuation risk. For a detailed list of Fund risks see the prospectus.
Digital Assets Risk: The Bitcoin network was first launched in 2009 and bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Although the Bitcoin network is the most established digital asset network, the Bitcoin network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. Moreover, because digital assets, including bitcoin, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this prospectus. Digital assets represent a new and rapidly evolving industry, and the value of the Underlying ETPs’ shares depends on the acceptance of bitcoin. The realization of one or more of the following risks could materially adversely affect the value of the Underlying ETPs’ shares.
100%, 90% or 80% capital protection is over a one-year period before fees and expenses. All caps are predetermined.
Cap Rate – Maximum percentage return an investor can achieve from an investment in a Fund if held over the Outcome Period.
Protection Level – Amount of protection a Fund is designed to achieve over the Days Remaining.
Outcome Period – Number of days in the Outcome Period.
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