3 strategies to safeguard Bitcoin gains during Ethereum ETF frenzy

Cryptocurrency’s leading player has been dethroned from its top position. The highly anticipated launch of exchange-traded funds (ETFs) for Ethereum in the United States has caused Ether (ETH) to surge more than 20% since May 20. In comparison, Bitcoin’s (BTC) performance appears lackluster. Although there are still opportunities to invest in the kingpin of crypto, not all of them are worth taking.
If you’re a die-hard Bitcoin believer, you can stop reading here. You already know that the U.S. dollar is on the verge of collapse, and a $200,000 BTC is just around the corner. But for everyone else, here are three practical tips for safeguarding your crypto profits once this bullish trend loses momentum.
Recognize that Ether ETFs may not benefit Bitcoin
The approval of Ether ETFs is positive for the crypto market as a whole, but it may not have the same effect on BTC, especially in the short term. With Ethereum dominating the market narrative in the coming months, it’s likely that BTC will retest previous price support levels.
Instead of making big directional bets, consider market-neutral strategies. One profitable approach this year has been a relatively simple carry trade between BTC’s spot and perpetual futures markets. As Bitcoin bulls increase their long positions, funding rates on futures exchanges have surged above 20%. Contrarians have been capitalizing on this by collecting payments for shorting BTC perpetuals while mitigating risk in the spot markets.


A covered strangle strategy involves buying out-of-the-money call and put options while holding the underlying asset. Source: Fidelity Investments
For a more advanced trade, investment research firm 10x Research recommends the “covered strangle” strategy. This moderately bullish bet against extreme volatility involves holding spot BTC while selling out-of-the-money call and put options that expire in December, at the $100,000 and $50,000 levels respectively. According to 10x Research, this strategy offers a “17% downside buffer or 17% more yield, depending on where BTC closes in December.”
Avoid self-custody and invest in ETFs
Bitcoin’s reputation as a long-term hedge against inflation is irrelevant if scams and exploits drain your wallet. This is why self-custody, which is often praised by Bitcoin enthusiasts, is not suitable for all but the most technologically savvy holders. Exploits have drained over $27 billion so far, which is more than 1% of the crypto market’s total capitalization. The hit rate for retail holders is even higher.
The safest option is to invest in BTC futures on established platforms like the Chicago Mercantile Exchange (CME). Cash-settled futures are immune to exploit risk, and BTC Micro Futures closely mirror spot positions. However, regularly rolling expired contracts adds complexity and costs.
Whether you like it or not, Bitcoin spot ETFs are truly the best option for most holders. With reputable custodians and expense ratios of 0.25%, BlackRock’s iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) strike a good balance between security and cost. However, be aware that bid-ask spreads and trading premiums can impact returns, and custodians’ partial reliance on hot wallets creates significant exploit risk.
Consider the thriving copper industry
The best way to invest in Bitcoin may not actually involve Bitcoin itself. Instead of focusing on digital gold, consider copper as a true long-term hedge against inflation. Copper’s correlation with Bitcoin surpasses that of almost any other commodity. It has practical applications, such as in wire and penny production, and has been in use since the Neolithic period, making it unlikely to be replaced by a competing smart contract network.


As of May 24, 2024, copper futures were trading at $4.76. Source: Chicago Mercantile Exchange
On the other hand, Bitcoin’s correlation with technology stocks has been steadily declining. The days of viewing BTC as a leveraged bet on the NASDAQ are gone. Copper futures, which are highly liquid and capital-efficient, outperform BTC as a reliable hedge against inflation while delivering superior risk-adjusted returns.
Bitcoin may have been the first mover in the crypto world, but it’s the last mover that truly matters. With the approval of Ether ETFs, Ethereum’s institutional adoption is set to skyrocket. It’s time for Bitcoin enthusiasts to start looking beyond Bitcoin.
Alex O’Donnell is the founder and CEO of Umami Labs. He previously worked as a financial journalist at Reuters for seven years, covering M&As and IPOs.
This article is for informational purposes only and should not be construed as legal or investment advice. The views expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.