The market is never short of tough players: Cboe BZX has applied to the U.S. SEC for an exemption to list six 3x leveraged funds, targeting Bitcoin, Ethereum, gold, silver, crude oil, and natural gas futures.🚀

You read that right—3x daily leverage. The Bitcoin and Ethereum products will mainly be based on CME futures, not holding spot directly. But the issue is: Cboe’s general rules explicitly prohibit “benchmark multiple” products, so they must go through a 19(b) case approval process. It’s still being held up at the SEC, and the registration statement hasn’t even become effective yet.

Why is regulation so cautious? Because leveraged funds have a fatal mechanism—daily reset. A 3x return is only for that day; for long-term holding, your returns depend on the order of daily up and down moves, not just a simple “Bitcoin goes up 3% and I make 9%.”

The data explains the problem best: for similar funds, the NAV loss can be as high as 96.15% on an annualized basis as of June 30—double the typical? Yes, you read that right, 96%! With only slight market fluctuations, your principal gets slowly ground away by compounding losses.

What’s even more painful is that even if you get the direction right, if the fluctuations along the way are large enough, the losses from leveraged funds may wipe out all your gains—this is the “volatility tax.” Even professional institutions don’t dare to hold them long-term, let alone ordinary retail investors.

Advice for everyday people: leveraged ETFs are tools for professional traders to use for short-term hedging, not for wealth management. If you truly believe in it, buy spot or a regular ETF—don’t touch leveraged products. Don’t make things difficult for your own wallet.😂

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