The world of cryptocurrency investment continues to evolve with the introduction of innovative financial products designed to bridge traditional finance and digital assets. In April 2025, First Trust Advisors, a prominent asset management firm, launched two new Bitcoin strategy exchange-traded funds (ETFs) that offer structured exposure to Bitcoin (BTC) while addressing key investor concerns around volatility, downside risk, and income generation.
These new offerings—FT Vest Bitcoin Strategy Floor15 ETF (BFAP) and FT Vest Bitcoin Strategy & Target Income ETF (DFII)—are part of First Trust’s growing Target Outcome ETF lineup, which has amassed over $28 billion in net assets. As spot Bitcoin ETFs collectively manage around $93 billion in assets, institutional interest in more sophisticated crypto-linked products is surging. These latest ETFs aim to attract risk-aware and income-focused investors who want exposure to Bitcoin without directly holding the volatile digital asset.
👉 Discover how structured crypto ETFs are reshaping investment strategies in 2025.
Understanding the FT Vest Bitcoin Strategy Floor15 ETF (BFAP)
The BFAP ETF is engineered for investors seeking participation in Bitcoin’s upside potential while limiting exposure to severe market downturns. Specifically, the fund is designed to cap annual drawdowns at approximately 15%, offering a level of downside protection rarely seen in traditional crypto investments.
To achieve this, BFAP employs a multi-layered strategy combining US Treasury securities, cash equivalents, and option contracts tied to Bitcoin performance. While this structure limits maximum gains compared to direct ownership, it provides a predictable risk profile—ideal for conservative investors or those nearing retirement who still want to benefit from long-term Bitcoin appreciation.
This "floor" mechanism aligns with the principles of outcome-oriented investing, where return profiles are pre-defined over specific time horizons. For example, if Bitcoin drops 40% in a year, BFAP holders would only experience a loss of about 15%, thanks to protective hedges built into the portfolio.
Such risk-mitigated access lowers the psychological barrier for many mainstream investors who have been hesitant to enter the crypto space due to extreme price swings.
Exploring the FT Vest Bitcoin Strategy & Target Income ETF (DFII)
While BFAP focuses on capital preservation, the DFII ETF takes a yield-centric approach. Designed as an actively managed fund, DFII aims to generate an annual return that exceeds short-dated US Treasuries by at least 15%, primarily through a covered call strategy on Bitcoin-linked assets.
Here’s how it works: the fund sells call options on Bitcoin-related instruments, collecting premiums in the process. These premiums form the core of the income stream, allowing DFII to deliver consistent returns even in sideways or moderately declining markets.
Because Bitcoin exhibits high implied volatility, option premiums tend to be richer than those on traditional assets—making it an attractive underlying for income strategies. Although gains are capped when Bitcoin surges, the trade-off is a steady income flow that traditional spot ETFs cannot provide.
This makes DFII particularly appealing to retirees, fixed-income investors, or portfolio managers looking to diversify yield sources beyond bonds and dividend stocks.
👉 Learn how option-based strategies can unlock passive income from digital assets.
How These ETFs Gain Exposure Without Holding Bitcoin
One notable feature of both BFAP and DFII is that they do not hold Bitcoin directly. Instead, exposure is achieved indirectly through regulated financial derivatives such as:
- Exchange-traded options on Bitcoin futures
- Bitcoin-linked exchange-traded products (ETPs)
- Over-the-counter (OTC) derivatives with institutional counterparties
This structure offers several advantages:
- Regulatory compliance: By avoiding direct custody of crypto, the funds remain within established securities frameworks.
- Operational simplicity: Investors gain exposure through familiar brokerage accounts without needing wallets or private keys.
- Tax efficiency: Gains are treated as standard capital gains, avoiding complexities tied to crypto tax reporting.
- Liquidity and accessibility: Traded on major stock exchanges like any other ETF, enabling seamless integration into diversified portfolios.
This indirect model reflects a broader trend among asset managers: creating regulated, user-friendly gateways to digital assets that meet the expectations of institutional and retail investors alike.
Meeting Investor Demand Amid Growing Crypto Institutionalization
The launch of these two ETFs comes at a pivotal moment in the maturation of cryptocurrency markets. With total assets in spot Bitcoin ETFs approaching $93 billion, financial institutions are increasingly developing structured crypto products that cater to different risk-return profiles.
As Ryan Issakainen, Senior Vice President and ETF Strategist at First Trust, stated in the company’s announcement:
“These funds are designed for investors who recognize Bitcoin’s potential but are concerned about its volatility. BFAP allows participation with a defined floor, while DFII turns volatility into income—a powerful combination.”
His comments highlight a shift from speculative crypto investing toward strategic allocation, where tools like outcome-based ETFs help align digital asset exposure with long-term financial goals.
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Frequently Asked Questions (FAQ)
Q: Do BFAP and DFII hold actual Bitcoin?
A: No. Both ETFs gain exposure to Bitcoin through derivatives like options and Bitcoin-linked ETPs, not direct ownership.
Q: How does BFAP limit losses to 15%?
A: It uses a dynamic hedging strategy involving Treasury securities and put options to create a downside buffer over a one-year period.
Q: Is DFII suitable for conservative investors?
A: While DFII manages risk through options writing, its performance depends on market conditions and volatility. It’s best suited for investors comfortable with moderate risk seeking enhanced income.
Q: Can I use these ETFs in my retirement account?
A: Yes. Since they trade like traditional ETFs, BFAP and DFII can be held in IRAs and other tax-advantaged accounts.
Q: What fees do these ETFs charge?
A: Specific expense ratios were not detailed in the initial release, but they are expected to reflect active management and options-based strategies.
Q: How often are outcomes reset in these funds?
A: The outcome periods, including loss buffers and income targets, are typically reset annually.
👉 See how next-gen ETFs are integrating blockchain-era assets into modern portfolios.
Final Thoughts
First Trust Advisors’ entry into the Bitcoin strategy space marks a significant step forward in the institutionalization of digital assets. With BFAP offering downside protection and DFII delivering targeted income, these ETFs exemplify how innovation is making crypto investing more accessible, manageable, and aligned with diverse financial objectives.
As regulatory clarity improves and product sophistication grows, expect more hybrid instruments that blend traditional finance mechanics with the high-growth potential of cryptocurrencies—ushering in a new era of intelligent digital asset allocation.