Summary Bitcoin's growth is fueled by digitalization trends, including AI, blockchain, and cybersecurity, driving financial sector innovation and adoption. Despite skepticism, Bitcoin remains the dominant digital currency, with a multi-year runway toward a potential $10 trillion market cap. BTCI ETF stands out for total return potential, outperforming peers and offering a compelling 22% yield for both growth and income strategies. Risks remain tied to assumptions about Bitcoin's growth cycle, but the overall investment thesis for Bitcoin exposure remains strong. Introduction The interest in digital currencies of cyberspace continues to grow. According to what I did with Google Trends, the query on "Bitcoin" increased by 1600% in 2025. I recently initiated a HOLD rating on Roundhill Bitcoin Covered Call Strategy ETF( YBTC ) and suggested it as a solid income source with a nice flexibility to reinvest the income into other crypto exposures. As a follow-up, I opened my initial position with a peer fund called NEOS Bitcoin High Income ETF ( BTCI ) and started to build my crypto portfolio around it. As I will show below, BTCI's 21% monthly distribution is high enough for income and reinvestment purposes, while the total performance has been more impressive than YBTC during its short history. With BTCI, a simple DRIP will be easy and efficient to accomplish my goal. The data-driven option strategy is rule-based, which provides a reasonable assurance for maintaining a promising total performance in the future. I will start with a BUY rating on BTCI and recommend it to the income-oriented investors who are interested in getting Bitcoin exposure and looking for a great total return in the long run. ETF Overview BTCI is an actively managed ETF by NEOS funds. The goal for the ETF is to generate high income from selling call options with the underlying anchored around the Bitcoin ETFs, as shown below: BTCI Holdings (Neos) More specifically, the ETF will create synthetic positions based on the Cboe Bitcoin U.S. ETF Index and write call options with a higher strike price. As shown above, the current holdings are for September (writing calls) and October (for synthetic positions). Note that the monthly call-writing is the main income source, with the Treasury Bill holdings serving as collateral and offering the short-term interest income. VanEck Bitcoin ETF (with about 24% weight) is a key holding designed for the growth of the Bitcoin market. The monthly distribution is the main attraction for the interested investors, with a current rate of about 21% estimated based on the 10-month history, as the fund was started on 10/16/2024. BTCI's NAV has tracked the price very closely since its inception. The AUM of $528.00 Million and the trading volume of 295,478 (latest) imply strongly its increasing acceptance in the marketplace. The expense ratio is 0.99% which is slightly higher than YBTC (0.96%). The AUM and liquidity mentioned earlier are much better than YBTC, which issues a weekly distribution at about twice higher rate. Cyberspace Technology Is One Key Growth Driver There is still a significant amount of skepticism in Wall Street about Bitcoin and the digital cryptocurrencies in general, despite the $2.2 trillion market matching the gold market, as discussed in my previous writing on YBTC. However, there is another very important aspect that could be overlooked by many investors is the bigger technology trend of digitalization. Triggered by the internet, virtualization and cloud computing, and current AI computing. Many industries, such as the Financial sector, have seen technology products and services growing rapidly in the last few years. For example, the FinTech companies have been seeing a lot of momentum and, more importantly, a growing number of successful businesses. On the other hand, the digital era started about ten years ago may see a comeback in 2025. For example, in digital advertising, Google has proven as one of the biggest winners and is looking forward to its future growth. I believe that the digital financial world is definitely where the financial industry is moving towards, thanks to the advanced technologies such as blockchain, Generative AI, and CyberSecurity, which have been solving in solving some of the key challenges involved with the financial systems. Digital gold and Digital Currencies are getting increasingly closer to reality. Keep in mind, there will be more exciting technology innovations that may come around and lift the digital world, just like what happened to Bitcoin and other blockchain-based platforms in the past decade. So the technology will drive the future of growth in cyberspace. The Bitcoin Market Will Continue to Grow What role do Bitcoin and its growing ecosystem play in the overall trend of financial digitization? One key measure is the size of Bitcoin in the digital currency marketplace. As shown below, Bitcoin is 58.58% of the total market cap. Bitcoin Market Shares (Coingecko) It might be debatable if Bitcoin can maintain the same share over time. However, it may not be an issue in terms of investing. There is always a cycle for any growth theme. Bitcoin may not grow as fast as some of the other coins, such as stablecoins. But it will remain a major player for the current crypto cycle, which is still in its early phase, in my opinion. If I take the estimated $10T market cap (as indicated in my YBTC analysis) as the target, going from $2T trillion will be a multi-year journey. In terms of business and market, the current cycle will not likely be reversed. In other words, it is more sensible for the Bitcoin stakeholders and ecosystem to push through rather than looking and waiting for new and unproven alternatives, which do not fit the risk appetite of the financial world. The growing pace could be a different story. It might take 10 years or longer to reach $10 trillion mark instead of 5 years (2025) mentioned before. However, it does not change much about the investment theme for Bitcoin. I think there will be different strategies for investing in Bitcoin. The income DRIP approach is my favorite for the volatile Bitcoin market and aims for a good total return. BTCI ETF is one of such good choices. Time to Seek the Total Return I am looking to increase the return target for my Bitcoin and other crypto exposures. One approach is to reinvest (more) in the direct exposures, e.g, the shares of the underlying Bitcoin ETFs. There are many new ETFs surfaced recently. However, BTCI remains one of my top considerations for long-term capital growth in the current crypto growth cycle. Compared to YBTC, the monthly distribution is better than weekly in capturing the price gain. Furthermore more there is a growth element built in BTCI as mentioned in the ETF Overview, which helps solve the gain-cap issue with covered call option selling. The following is the price comparison. Although it is rather a short, 8-month YTD comparison, BTCI has outperformed the iShares Bitcoin Trust ETF( IBIT ) in total return and the S&P 500 index. Notice that this remarkable performance may not hold under all market conditions. However, since the BTCI strategy works more like a rule-based strategy thanks to its option trades, we can certainly expect a decent performance for a longer time. BTCI Total Return (SA) Notice that the BTCI's 21% high-income distribution will offer great flexibility for the growth seeker to reinvest and allow some reasonable space for repositioning and rebalancing as well. Risks And Caveats The Bitcoin market growth theme and cycle are built based on the key assumption of digital currency acceptance. The risk of the assumption being violated remains noticeable on Wall Street, causing the Bitcoin price to be volatile. In some severe cases, the significant underperformance of the Bitcoin ETFs, including BTCI, could be observed. The monthly distribution rate may vary from month to month, which may not be desirable for those who wish to have a rather fixed rate of income. However, the income stream is very reliable as the Bitcoin volatility is consistently high and contributes to the high premium of the (call) options. In other words, as long as market interest stays high, the option income will be stable. The volatility level will decide the premium income level. Investors should also bear in mind the limitations of covered calls, including the capped gains in an uptrend price move that may outpace the price target set by the covered calls. The relatively high expense ratio (0.99%) is a typical key drag on the total return for long-term holding. Investors can consider a DIY approach to avoid the high charge. Keep in mind, the option strategy involved in BTCI is pretty straightforward. Closing Thoughts It is widely anticipated that the Bitcoin market will continue to grow and move toward a much larger size than the current $2.2 trillion. Investors who believe in the digital future for the financial industry may want to invest in such growth potential. Despite its 10-month-old age, BTCI offers a good alternative with its stable high income of 21% rate and a strong total return outperforming the S&P 500 and some peer funds. Bitcoin-savvy investors could also take advantage of the high monthly distribution to reinvest in the other Bitcoin plays of their favorite and manage the high volatility of the current Bitcoin market wisely.
