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Bridging Traditional Markets and Cryptocurrency: Understanding One+One™ ETFs

Cryptocurrency has become an asset class many investors want to explore. For those seeking Bitcoin exposure without the complexities of digital wallets or direct token ownership, or investors looking for capital-efficient ways to combine traditional markets and cryptocurrency, One+One™ ETFs provide a solution.

The Evolution of Crypto Investing: From Direct Ownership to ETFs
The cryptocurrency market has grown since Bitcoin's introduction, evolving from a niche asset to an alternative investment that both institutions and retail investors are adding to portfolios.

• Managing digital wallets and private keys
• Navigating exchanges
• Security concerns with wallet breaches
• Complex tax reporting
• High transaction costs

These barriers have prevented many investors from participating in this market. Regulated ETFs providing cryptocurrency exposure represent an advancement that makes this market accessible through familiar investment vehicles.

Introducing One+One™ ETFs: A Hybrid Approach to Market Exposure

Volatility Shares' One+One™ ETFs provide dual exposure to both traditional market indices and Bitcoin in a single product.

The One+One™ family currently includes two ETFs:

• OOQB: One+One™ NASDAQ-100® and Bitcoin ETF
• OOSB: One+One™ S&P 500® and Bitcoin ETF

These ETFs provide investors with simultaneous exposure to two asset classes:

1.    A traditional market index (either the NASDAQ-100® or S&P 500®)
2.    Bitcoin

How One+One™ ETFs Work: Understanding the Leverage Mechanism

The key feature of these ETFs is their use of leverage to create capital efficiency. Under normal circumstances, One+One™ ETFs seek magnified exposure of 200% of total assets using leverage, specifically:

• 100% exposure to an equity index (NASDAQ-100® or S&P 500®)
• PLUS 100% exposure to Bitcoin futures

This 2x leverage means that for every $1 invested, you receive approximately $2 of total market exposure—$1 to the equity index and $1 to Bitcoin futures—all within a single ETF.

The Mechanics Behind Dual Exposure and Leverage

One+One™ ETFs achieve this leveraged dual exposure through:

• Direct equity investment or futures contracts on the S&P 500® or NASDAQ-100® indices
• Bitcoin futures contracts traded on CFTC-registered exchanges

The leverage works primarily through futures contracts. These derivative instruments allow the Funds to control a larger value with a smaller margin deposit. For example, a futures contract might require only 5-15% of the contract's value as margin, allowing a fund to gain exposure to much larger notional values than its assets under management.

Additionally, the Funds actively monitor and rebalance their portfolios to maintain target exposures. Rebalancing occurs when the difference in asset weights exceeds 20% on two consecutive market closes, or when the sum of assets falls below 90% or exceeds 110% of the target.
Note: The value of an investment in the Fund could decline significantly and without warning, including to zero. You should be prepared to lose your entire investment within a single day. The Shares will change in value, and you could lose money by investing in the Fund. The Fund may not achieve their investment objectives

Potential Benefits of Investing in One+One™ ETFs

Capital Efficiency 
The primary advantage of One+One™ ETFs is capital efficiency. Instead of allocating separate capital for equity and Bitcoin exposure, you achieve both with one investment. For example, a $100 investment provides approximately:

• $100 exposure to the index (S&P 500® or NASDAQ-100®)
• $100 exposure to Bitcoin

Simplified Access to Bitcoin Markets
One+One™ ETFs provide exposure to Bitcoin price movements through regulated futures markets, eliminating the need to:

• Set up cryptocurrency wallets
• Manage private keys
• Navigate exchanges
• Deal with wallet security

Note: OOSB and OOQB do not invest directly in Bitcoin.

Professional Leverage Management
The Funds professionally manage the leverage ratio and rebalancing to maintain target allocations when market movements cause allocation drift. This removes the need to actively manage leveraged positions across separate investment vehicles.

Familiar Investment Vehicle
As ETFs, One+One™ tickers OOSB or OOQB can be purchased through standard brokerage accounts, providing the same convenience as traditional ETFs.

Performance Scenarios

Due to the 2x leverage structure of One+One™ ETFs, market movements are amplified. Here are scenarios using a $100 investment:

When Both Markets Rise (Amplified Gains)
If both the equity index and Bitcoin futures rise 20% simultaneously:
•    Your $100 equity index exposure gains $20
•    Your $100 Bitcoin futures exposure gains $20
•    Total gain: $40 (40% return on initial investment)

When Both Markets Fall (Amplified Losses)
If both the equity index and Bitcoin futures decline 20% simultaneously:
•    Your $100 equity index exposure loses $20
•    Your $100 Bitcoin futures exposure loses $20
•    Total loss: $40 (40% decline on initial investment)

When Markets Move in Opposite Directions (Offset Effect)
If the index gains 10% but Bitcoin futures decline 30%:
•    Your $100 index exposure gains $10
•    Your $100 Bitcoin futures exposure loses $30
•    Net result: $20 loss (20% decline)

Conversely, if the index declines 10% but Bitcoin futures gain 30%:
•    Your $100 index exposure loses $10
•    Your $100 Bitcoin futures exposure gains $30
•    Net result: $20 gain (20% return)

When One Market Significantly Outperforms (Asymmetric Returns)
If the index rises 5% while Bitcoin futures surge 40%:
•    Your $100 index exposure gains $5
•    Your $100 Bitcoin futures exposure gains $40
•    Total return: $45 (45% return)

These scenarios show how the leverage mechanism amplifies both gains and losses. The 2x leverage structure means market movements have double impact on the ETF's returns compared to non-leveraged exposure to the same assets.

Who Should Consider One+One™ ETFs?

  Crypto-Curious Investors
If you want Bitcoin exposure but hesitate due to the complexity of direct cryptocurrency investments, One+One™ ETFs offer a familiar investment structure through a standard brokerage account while maintaining equity market participation. You should also be comfortable and familiar with the risks associated with leveraged ETFs.

  Experienced Cryptocurrency Investors
If you already invest in cryptocurrencies but seek more capital-efficient ways to maintain both equity and Bitcoin exposure, One+One™ ETFs provide a professionally managed, leveraged solution.

  Investors Comfortable with Leverage
Given the 2x leverage structure, these ETFs are suitable for investors who understand and accept the amplified risks and volatility that come with leveraged investments.

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Important Considerations

Key points to understand:

1. Leveraged Structure: The 2x leverage means both gains and losses are amplified compared to non-leveraged investments.
2. Bitcoin Futures Exposure: One+One™ ETFs do not invest directly in Bitcoin. They gain exposure through futures contracts, which can perform differently from spot Bitcoin prices.
3. Active Rebalancing: To maintain the 2x leverage ratio, the Funds must actively rebalance, which can impact performance during volatile periods.
4. Futures Roll Costs: The Funds incur costs when rolling futures contracts, which can affect long-term performance, especially in contango markets.
5. Higher Volatility: The combined leverage and Bitcoin exposure may result in significant volatility compared to traditional ETFs.

These ETFs may experience higher volatility and larger potential gains or losses than traditional ETFs. Investors should carefully consider their risk tolerance before investing.

How to Invest in One+One™ ETFs

OOQB and OOSB can be purchased through standard brokerage accounts using their ticker symbols. This flexibility is a key advantage over direct cryptocurrency investments.

Conclusion: Leveraged Exposure to Dual Asset Classes

One+One™ ETFs provide a capital-efficient approach to investing in both traditional equity markets and Bitcoin through a professionally managed, leveraged product.

Through their distinct 2x leverage structure offering dual exposure, these ETFs bridge conventional investment strategies and digital assets within a familiar ETF framework.