European investors have gained access to a new way to invest in Bitcoin, as HANetf has introduced the Arrow Bitcoin EUR Hedged ETF. This launch marks the first time a euro-hedged Bitcoin exchange-traded fund has debuted in Europe, providing a solution to the dual exposure risks previously faced by investors in the region.
New product aims to limit currency risk
HANetf, a major ETF provider managing $9.2 billion in assets, designed the product to address the challenges of dealing with two variables: the Bitcoin price and exchange rate fluctuations between the euro and the US dollar. Since Bitcoin trades in US dollars, European investors buying unhedged products are exposed to both price swings in the cryptocurrency and changes in the dollar-to-euro exchange rate.
The Arrow Bitcoin EUR Hedged ETF seeks to directly remove exchange rate risk for European holders by mirroring the returns of Bitcoin in euro terms. This approach allows investors to participate strictly in Bitcoin’s performance, without worrying about unpredictable shifts in currency values.
“With this launch, we are bringing the established logic of euro-hedged ETFs to the crypto market. Investors have long understood that currency movements can have a meaningful impact on returns on different asset classes, for example gold,” stated Hector McNeil, co-founder and co-CEO of HANetf.
How the currency hedge works
HSBC, one of the world’s largest banking institutions, will provide the currency hedging for this ETF. Euro-hedged funds typically function by using forward contracts, where a bank agrees to sell the equivalent US dollar value of the underlying asset for euros at a fixed date in the future.
If the dollar drops against the euro during this period, the decrease in Bitcoin’s value in euros is counterbalanced by gains from the forward contract, and the same applies in reverse. These forward contracts are generally reset each month, with the hedge adjusted to match the most current data.
Mini dictionary: Euro-hedged ETF – An exchange-traded fund structured to neutralize the impact of fluctuations between the euro and the currency in which the underlying asset is priced, commonly through currency forward contracts or other financial instruments.
ETF growth and market context
The launch of this euro-hedged ETF comes after a landmark period for Bitcoin ETFs in the United States. The US Securities and Exchange Commission approved spot Bitcoin ETFs in 2024, leading to substantial inflows and rapid growth in assets under management.
Major firms such as BlackRock, Fidelity, and Morgan Stanley manage these US-based funds. Investors are able to gain exposure to Bitcoin price movements without having to handle or store cryptocurrencies themselves.
According to Coinglass, US Bitcoin ETFs now collectively oversee $111.1 billion in assets, following what has been described as the most successful ETF launch in market history.
| Product | Region | Cumulative Assets | Hedged Currency |
|---|---|---|---|
| Arrow Bitcoin EUR Hedged ETF | Europe | N/A (new launch) | Euro |
| US Bitcoin ETFs (multiple) | United States | $111.1 billion | USD |
With the debut of the Arrow Bitcoin EUR Hedged ETF, HANetf positions itself at the forefront of innovative crypto investment products in Europe, meeting the growing demand for exposure with added protection against currency volatility.
