Tidal Trust II has submitted an application for a new Bitcoin exchange-traded fund (ETF) that will provide a position in Bitcoin during hours when the U.S. markets are closed to the U.S. Securities and Exchange Commission (SEC).
This application comes at a time when spot BTC ETFs have experienced their weakest month to date, with record outflows and increasing concerns about price manipulation during the opening of the U.S. markets.
The SEC filing revealed an ETF that invests in Bitcoin after hours.
The Form N-1A application submitted on Tuesday proposes the addition of two new ETFs to the existing fund. These include the Nicholas Bitcoin and Treasuries AfterDark ETF and the Nicholas Bitcoin Tail ETF.
According to the announcement, the AfterDark ETF will not hold BTC directly. Instead, it will take positions in Bitcoin through US-listed Bitcoin futures, Bitcoin options, and Bitcoin ETFs or ETPs.
A subsidiary in the Cayman Islands may be used to manage positions. The fund's objective: to generate returns regularly from Bitcoin's price movements during nighttime hours. During daytime trading hours, the fund will hold US short-term bonds and cash equivalents.
The application document included the following statements: 'When the fund uses Bitcoin Futures, it opens trades in these instruments during US nighttime hours and closes its positions shortly after the US market opens on each trading day. When using Bitcoin Underlying Funds, the fund purchases securities at the US market close and sells this position during the next opening hours... When using Bitcoin Options, the fund typically opens a synthetic long Bitcoin position close to the US market close. These positions are generally closed or reduced when the markets reopen. However, the fund may hold these synthetic long positions for a longer period; during daytime hours, it can typically open a synthetic short position to balance this risk.'
Bloomberg senior ETF analyst Eric Balchunas evaluated this new strategy in his recent X (formerly Twitter) post. Balchunas noted that internal research conducted last year revealed that a significant portion of Bitcoin's gains occurred during nighttime hours.
Balchunas stated, 'This does not mean that ETFs have no effect in this situation. Positions are influenced by ETFs or derivative positions created through incoming transactions. However, we might see that the After Dark ETF could provide better returns; time will tell.'
This application came as industry followers frequently raised allegations of price manipulation during US daytime hours. Analysts are drawing attention to a recurring Bitcoin price decline pattern during US stock openings.
Bitcoin ETF Inflows and Changes in Investor Sentiment
On the other hand, spot Bitcoin ETFs faced significant pressure in the fourth quarter. According to SoSoValue data, total outflows in November reached a record $3.48 billion. BlackRock's iShares Bitcoin ETF had the largest share with an outflow of $2.34 billion.
The increasing outflows coincided with a period when the Bitcoin price fell by 17.4% in November, experiencing the sharpest monthly decline of the year. This development undermined investor confidence and led to a cautious atmosphere re-emerging in the digital asset market.
Outflows continued in December as well. In the first week of the month, an additional $87.77 million exited from spot Bitcoin ETFs. However, the situation slightly improved afterwards. On December 9, a notable inflow of $151.74 million occurred into the funds.
