Defiance Shakes Up Crypto: Files for Bitcoin and Ethereum ETF to Capture Hedge Fund Arbitrage Strategy

Wall Street's playing catch-up—again. Defiance just dropped a bombshell ETF filing that could rewrite the rules of crypto investing.

The Arbitrage Edge

This isn't just another crypto fund. Defiance's new Bitcoin and Ethereum ETF targets hedge funds' favorite game: arbitrage. It's built to exploit price gaps between spot markets and derivatives—something institutions love but retail investors rarely access.

Why It Matters

Traditional funds charge premium fees for complex strategies. This ETF could democratize sophisticated trading moves while cutting out the middleman. No more 2-and-20 fee structures just to play spread trades.

The Cynical Take

Because nothing says 'financial innovation' like letting ordinary investors finally mimic what hedge funds have been doing for years—while probably still finding ways to skim off the top.

Bottom line: Defiance isn't just launching a product. It's throwing a wrench in the traditional finance machine—and crypto's never been happier to play disruptor.

Performance data reveals market-neutral profits

Seyffart’s analysis shows Ethereum basis returns maintained yields around 10% through much of 2025, though they experienced single-digit and negative performance during market stress from late December 2024 through mid-March 2025.

Bitcoin’s basis trade generated consistently low single-digit returns through the first quarter before climbing to levels NEAR 8% by late July.

The basis trade capitalizes on premiums that cryptocurrency futures contracts typically command over spot prices. Bitcoin futures premiums reached 17% annualized following the November election before moderating to current levels.

Defiance has established itself through innovative crypto-adjacent products. The company launched Leveraged single-stock ETFs targeting Strategy and Riot Platforms, both Bitcoin proxy companies.

Defiance also filed “BattleShares” ETFs that simultaneously hold long and short positions across bitcoin versus Ethereum and Bitcoin versus gold pairs.

The new filings add to the pile of nearly 100 crypto-related ETF filings awaiting a decision by the US Securities and Exchange Commission.

The company’s proposed funds make an institutional strategy accessible to retail investors without the capital requirements and operational complexity needed to execute basis trades independently.