10x Research said BlackRock’s Bitcoin yield-enhanced exchange-traded fund, BITA, may have a structural flaw that could cause investors to underperform spot Bitcoin and fail to achieve attractive absolute returns.

According to ChainCatcher, the firm argued that BITA’s approach of generating income by selling call options could be disadvantageous in most market conditions.

10x Research said BITA appears to follow a fixed rule of selling call options on a monthly schedule, which may force investors into an unfavorable trade-off between income and upside exposure whether Bitcoin rises, trades sideways, or falls.

The firm contrasted this with a framework it described as “timing and conditional execution,” in which option premium would be collected only when market conditions are favorable.

It added that Bitcoin’s high volatility is largely driven by information asymmetry among market participants and a heavily marketed market environment, and said many investors have long tried to capture volatility returns through systematic strategies, but most have not succeeded.