NEW BITCOIN ‘AFTERDARK’ ETF TARGETS BTC’S OVERNIGHT MOVES, SKIPS U.S. DAY TRADING

Nicholas AfterDark ETF: The new Nicholas AfterDark ETF is designed to hold Bitcoin exclusively during overnight hours and switch into Treasuries during U.S. market hours, aiming to take advantage of BTC’s stronger performance outside the U.S., According to crypto analytics firm Velo.xyz, Bitcoin has consistently shown better returns during non-U.S. trading sessions over the past year, prompting an asset manager to launch this ETF to capitalize on the trend.

Bitcoin Faces Volatility as Nicholas Plans Overnight-Focused ETF

Data shows that Bitcoin (BTC) tends to gain more during hours when U.S. markets are closed, while performance during standard U.S. trading sessions is often weaker or even negative, according to hourly performance analyses.

Bloomberg Intelligence analyst Eric Balchunas noted that these trends have persisted through much of 2024, suggesting that positioning in spot ETFs and derivatives may be influencing Bitcoin’s price during regular market hours.

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In response, Nicholas Financial Corporation, a boutique wealth manager, has filed with the U.S. Securities and Exchange Commission to launch the Nicholas Bitcoin and Treasuries AfterDark ETF. This fund would hold Bitcoin only during non-U.S. market hours, purchasing BTC at 4 p.m. Eastern Time when U.S. equities close, and selling by 9:30 a.m. the next day before Wall Street opens. During U.S. market hours, the fund would invest in short-term Treasury securities.

This approach differs from traditional spot Bitcoin ETFs, which maintain continuous exposure to the cryptocurrency. Nicholas Financial has also filed for a second product, the Nicholas Bitcoin Tail ETF, aimed at pursuing a risk-managed strategy focused on extreme market moves.

Analysts Explain Bitcoin’s U.S. Hour Performance and the Strategy Behind the AfterDark ETF

Market analysts point to several factors behind Bitcoin’s performance patterns during U.S. trading hours. Most spot Bitcoin ETFs conduct their trading and rebalancing during U.S. equity market hours, linking the cryptocurrency’s price closely to broader risk sentiment, experts say.

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Derivatives markets may also play a role. Institutional investors often hedge their spot positions with futures during U.S. sessions, which can limit upside potential or amplify losses when positioning becomes concentrated.

The proposed AfterDark ETF aims to take advantage of Bitcoin’s stronger performance during global off-hours while minimizing exposure during U.S. market events, Federal Reserve announcements, and other macro headlines. By pairing Bitcoin exposure with Treasury holdings, the fund seeks to reduce drawdowns while capturing historical overnight gains.

Nicholas AfterDark ETF Highlights Maturity and Innovation in the Bitcoin ETF Market

The filing reflects the growing sophistication of the Bitcoin ETF ecosystem, with issuers exploring specialized strategies to differentiate their products amid a market already crowded with spot and futures-based funds. It also underscores the increasing focus on designing investment vehicles that consider market microstructure effects.

The AfterDark ETF raises questions for regulators regarding the flexibility of ETF frameworks when exposure is structured along time-based dimensions. However, the fund does not appear to introduce new custody or market integrity risks beyond those present in existing Bitcoin ETF structures.

Bitcoin’s price behavior continues to be shaped by ETF flows, institutional trading strategies, and global liquidity cycles, highlighting how the cryptocurrency is increasingly integrating into traditional financial markets.

FAQs

1. What is the Nicholas AfterDark ETF designed to do?

It holds Bitcoin overnight and switches to Treasuries during U.S. market hours to capture BTC’s stronger performance outside the U.S.

2. During what hours does the AfterDark ETF hold Bitcoin?

From 4 p.m. Eastern Time when U.S. markets close until 9:30 a.m. the next day before Wall Street opens.

3. Why does Bitcoin perform better during non-U.S. trading hours?

Analysts say it’s due to ETF flows, derivatives positioning, and less influence from U.S. macro headlines.

4. How does the AfterDark ETF differ from traditional Bitcoin ETFs?

Unlike traditional ETFs, it does not maintain continuous Bitcoin exposure and rotates into Treasuries during U.S. hours.

5. What does the filing indicate about the Bitcoin ETF market?

It shows maturation and innovation, with issuers exploring specialized strategies and market microstructure effects without adding new custody or integrity risks.