- Unlike spot ETPs, leveraged ETPs track a multiple of daily price changes, rather than long-term cumulative returns.

- Due to daily resets, returns over extended periods can diverge from expectations due to compounding effects.

• Investors may employ these products for short-term tactical positioning, hedging strategies, or expressing market views without the need for direct futures exposure or margin accounts.

• No, losses are limited to the initial investment amount. However, given the amplified nature of returns, investors may experience rapid capital depletion.

• No. Due to daily rebalancing and compounding effects, actual returns over multiple 10 days may deviate from a strict 2x multiple of Bitcoin’s cumulative return.

• Currently, the most practical path to create the leveraged bitcoin ETP was using Bitcoin futures, from a risk management and costs perspective. Hashdex is continuously in conversation with market participants and the structure might change including using swaps, direct Bitcoin or Bitcoin ETP as collateral.

• There should be no impact on the ETPs as ETP assets are held in favour of an independent trustee (LawDebenture) on behalf and for the benefit of investors. The ETP assets are ring-fenced from other Hashdex entities to minimise risk to investors in the event of bankruptcy of Hashdex AG. Other fees, like costs incurred in connection with the unwinding of the issuer’s operations, may be reflected in each ETP’s final NAV.

Broadly speaking, the intraday restrike mechanism would be invoked intraday the moment the return of the relevant underlying (non-leveraged) index from the previous day’s index close reaches a certain threshold. It is enough for the relevant index to ‘touch’ that threshold for the mechanism to be invoked. There may be multiple intraday restrike events on a single day if the relevant index continues to move in an adverse direction for the ETP. At each point during the day the last restrike price acts as if it were a normal day’s close.

The intraday rebalance takes place in the same way as the ETP normally resets its leverage at the end of each day, but with a few important differences:

- The ETP restrike takes place over a period of 15 to 60 minutes following the moment at which the relevant index touched the threshold.
- If the market is less liquid, the ETP restrike price may be further adjusted down according to the actual rebalancing cost incurred. The application of such an adjustment for costs may result in the product’s price falling to 0 if the issuer provider was not successful in rebalancing the product and the underlying index continued its adverse move.
- We will inform the investor community of a restrike price as soon as it is determined and verified.
- The leverage of the ETP from the restrike price to the next rebalance (which should typically be the close but could be another restrike if the underlying index moves again by the same threshold amount), is its designated daily leverage factor, as specified in the ETP’s name.