Defiance ETFs has recently filed applications for two market-neutral exchange-traded funds (ETFs) focused on Bitcoin and Ethereum. Named NBIT and DETH, these funds intend to employ a hedge fund arbitrage strategy aimed at capitalizing on price discrepancies between spot and futures markets.
Bloomberg’s senior ETF analyst, Eric Balchunas, highlighted these filings on September 16. The funds plan to purchase spot Bitcoin and Ethereum ETFs, notably including BlackRock’s IBIT and ETHA, while simultaneously shorting futures contracts. This strategy is designed to exploit the premiums that futures often carry over spot prices, potentially yielding profits from these price differentials.
Further analysis by Bloomberg ETF analyst James Seyffart presented insights into the past performance of similar strategies. He found that Ethereum basis trades have historically delivered gross annualized returns averaging around 10% under stable market conditions. In contrast, Bitcoin basis trades reported gross yields climbing to 11% in recent months, occasionally reaching double-digit percentages during periods of market volatility.
The market-neutral structure of these trades aims to generate returns irrespective of the direction of cryptocurrency prices by taking advantage of inefficiencies between the spot and derivatives markets. Seyffart’s analysis indicated that Ethereum basis returns maintained yields close to 10% for much of 2025, though they did experience fluctuations, with some early-year periods reflecting single-digit and negative performance due to market stress.
On the Bitcoin side, returns from basis trades were more variable, initially showing low single-digit yields in the first quarter before improving to approximately 8% by late July. The profitability of these strategies often hinges on the premiums that futures contracts can command over their spot counterparts, with Bitcoin futures premiums reportedly soaring to 17% annualized following the November elections before eventually settling at more moderate levels.
Defiance ETFs has built a reputation for innovation within the cryptocurrency space, previously launching leveraged single-stock ETFs that focus on Bitcoin proxy companies like Strategy and Riot Platforms. Additionally, the firm has introduced “BattleShares” ETFs that maintain both long and short positions across various asset pairs, including Bitcoin and Ethereum as well as Bitcoin and gold.
The new filings from Defiance contribute to an ever-growing list of nearly 100 crypto-related ETF applications currently awaiting approval from the U.S. Securities and Exchange Commission. This strategic move by Defiance aims to democratize access to sophisticated hedge fund strategies, making them available to retail investors without requiring the significant capital and operational know-how typically needed for independent execution of basis trades.
