BTCI: An Income Stream for Bitcoin Bulls

byTony Hicks -
0

If you’re long-term bullish on Bitcoin but would love to clip steady cash flow along the way, NEOS Bitcoin High Income ETF (BTCI) is built exactly for that itch. It packages spot Bitcoin exposure via exchange-traded products (ETPs) and layers on a rules-driven covered-call overlay to convert Bitcoin’s famous volatility into monthly distributions—without you having to run an options playbook yourself. As a trade-off, upside gets capped when Bitcoin rips. For many investors, that swap—income today for some future moon-shot—can be a perfectly reasonable way to “get paid while you HODL.”

Below, I’ll break down what BTCI is, how it actually generates income, where it shines (and where it doesn’t), what the distributions look like, taxes, risks, and how it stacks up against a growing field of Bitcoin income ETFs.

BTCI in one glance

  • What it is: An actively managed ETF that holds Bitcoin ETPs for exposure and sells call options (primarily referencing Bitcoin futures ETFs) to generate monthly income. NEOS Investments

  • Ticker / Exchange: BTCI on Cboe (formerly BATS). NEOS Investments

  • Inception: October 17, 2024. NEOS Investments

  • Expense ratio: 0.98%. NEOS Investments

  • Net assets: About $614M as of Aug 22, 2025 (and crossed $500M AUM on Aug 15). NEOS InvestmentsETF Trends

  • Distribution cadence: Monthly. NEOS Investments

  • Displayed distribution rate: ~27.9% (as of late July data on the fund site), with a 30-day SEC yield of ~2.1%—these are different numbers; more on that below. NEOS Investments

  • Recent trading frictions: 30-day median bid-ask spread around 0.13%; premium/discount most recently ~0.10%. NEOS Investments

How BTCI turns volatility into income

Step 1: Get Bitcoin exposure.
BTCI doesn’t buy coins; it buys Bitcoin ETPs/ETFs (for example, recent holdings show a sizable weight in VanEck’s HODL plus U.S. T-bills for collateral and liquidity management). NEOS Investments

Step 2: Sell call options.
On top of that exposure, BTCI writes (sells) call options with Bitcoin futures ETFs as the reference asset. When Bitcoin chops or grinds higher (but not too explosively), those calls decay (theta) and the fund keeps the premium, which it aggregates into monthly distributions. NEOS describes it as a data-driven call option strategy—so strike selection and timing are systematic rather than seat-of-the-pants. NEOS Investments

The catch: Selling calls caps upside beyond the strike. In the right environment (sideways to moderately up), income can be juicy. In a face-melting rally, expect underperformance vs. spot Bitcoin because the ETF’s gains are called away above the strike. That’s the core trade-off of any covered-call fund. Seeking Alpha

What the income really looks like (and why the yields differ)

BTCI pays monthly and, so far in 2025, distributions have ranged roughly in the $1.26–$1.57 per share neighborhood through July, with an Aug 20, 2025 ex-date payout of $1.4153. The fund’s own page displays a “Distribution Rate” around 27.9% as of late July and a 30-day SEC yield near 2.1%—two very different numbers measuring different things. NEOS Investments

  • Distribution rate (what shows in big print on many income funds) is basically recent distribution x 12, divided by price—back-of-the-envelope, not a forward guarantee.

  • 30-day SEC yield is a regulatory formula emphasizing net investment income over the last 30 days—for options funds, it’s usually much lower because option premium isn’t always counted as “income” in that measure.

Third-party trackers echo the high trailing yields (variously ~24–27% lately), but remember: this is path-dependent and can fluctuate with Bitcoin’s volatility and option pricing. MarketChameleon.comSeeking Alpha

Bottom line: BTCI’s monthly check is powered by options premiums, which can swing with volatility, realized moves, and how aggressively the manager writes calls.

Taxes: the good, the tricky, and the “it depends”

  • Return of capital (ROC): To date, BTCI’s distributions have largely been classified as return of capital—about 96% for the most recent payout on record—which defers taxes by lowering your cost basis (until you sell). That’s a feature many income investors value, but it isn’t guaranteed and can change year to year. NEOS Investments

  • Cayman sub / ordinary income: The fund can use a Cayman Islands-based subsidiary to hold certain Bitcoin ETPs in a way that fits U.S. fund tax rules. NEOS flags that income from the subsidiary passes through as ordinary income, which can be taxed less favorably than capital gains. NEOS Investments

  • Documentation: NEOS posts Rule 19a-1 notices (source-of-distribution estimates) and Form 8937 (basis adjustments). Always check year-end tax documents before filing. This is not tax advice. NEOS Investments

Where BTCI fits in a portfolio

Think of BTCI as a satellite holding for Bitcoin believers who want cash flow:

  • Retirees and income-seekers who like Bitcoin’s upside but need monthly checks.

  • Volatility harvesters who believe BTC will see big swings, creating rich option premiums over time.

  • Investors willing to trade some moon-shot upside for a repeatable income stream and a smoother behavioral ride.

Conversely, if your personal thesis is “I want uncapped participation in the next parabolic Bitcoin leg,” you probably want a pure spot ETF (or BTC itself) and might avoid any call-writing overlays during bull phases.

What can go right (and wrong)

Pros

  1. Built-in income engine: The call overlay seeks to systematically harvest volatility and pay it out monthly. NEOS Investments

  2. Simplicity vs DIY: It’s hard to maintain a disciplined options program on Bitcoin ETFs yourself. BTCI handles it and puts cash in hand. NEOS Investments

  3. Growing scale and liquidity: The fund has scaled quickly (past $500M AUM mid-August; ~$614M by Aug 22), bid-ask spreads have been tame for an options fund, and premiums/discounts have been tight recently. ETF TrendsNEOS Investments

Cons / Risks

  1. Capped upside: In explosive rallies, covered-call funds lag. That’s by design. Seeking Alpha

  2. Tracking nuance: Using ETPs, options on Bitcoin futures ETFs, and cash/T-bills means returns won’t match spot BTC tick-for-tick. Futures dynamics (contango/backwardation) can influence outcomes. NEOS Investments

  3. Tax complexity: ROC reduces basis (great today, potentially higher taxes later). Cayman sub income can be ordinary. It’s tax-efficient for some, tax-messy for others. NEOS Investments

  4. Volatility dependency: If Bitcoin volatility compresses for long stretches, option premiums can shrink, and distributions may decline. (The fund itself underscores that amounts may fluctuate.) NEOS Investments

  5. Fees: At 0.98%, BTCI isn’t cheap relative to plain-vanilla spot ETFs—but you’re paying for an active options overlay. NEOS Investments

Scenario analysis: when BTCI shines (and when it doesn’t)

  • Sideways or gently rising Bitcoin: This is covered-call heaven. Calls expire worthless or get partially realized; the fund recycles premium into monthly distributions. Net result: attractive yield, moderate participation in BTC’s trend, less FOMO.

  • Sharp melt-ups: When BTC surges beyond the call strikes fast, gains above the strike are given up. You still keep the premium and any move up to the strike, but you won’t keep the full rocket ride. Expect underperformance vs. spot. Seeking Alpha

  • Prolonged drawdowns: Premium helps cushion—but doesn’t eliminate—drawdowns. BTCI still has directional exposure to Bitcoin; income won’t offset a deep crypto winter on its own. NEOS Investments

Distribution history (so far)

BTCI launched in Q4 2024 and has paid monthly ever since. For 2025, distributions posted by the sponsor include:

  • Jan $1.5718

  • Feb $1.4319

  • Mar $1.3350

  • Apr $1.2591

  • May $1.5145

  • Jun $1.3978

  • Jul $1.4716

  • Aug $1.4153 (ex-date Aug 20; payable Aug 22)

As always, past distributions are no guarantee of future payouts, and the fund is clear that amounts can change month to month. NEOS Investments

How BTCI compares to other Bitcoin income ETFs

BTCI isn’t alone anymore. Several competitors have launched covered-call Bitcoin strategies, each with nuances:

  • YieldMax Bitcoin Option Income Strategy ETF (YBIT): Seeks monthly income using an option-income approach referencing U.S.-listed Bitcoin ETFs. Aims squarely at current income; as with peers, distributions are variable and upside is capped. YieldMax ETFsMorningstar

  • Roundhill Bitcoin Covered Call Strategy ETF (YBTC): Uses a synthetic covered call approach and targets weekly distributions (that cadence will appeal to some). Roundhill Investments

  • Global X Bitcoin Covered Call ETF (BCCC): Another actively managed buy-write strategy on Bitcoin ETPs. Global X ETFs

  • Amplify Bitcoin Max Income Covered Call ETF (BAGY): Explicitly seeks to maximize current income and cites 30–60% annualized option premium targets (note: premiums are not the same as realized, sustainable yield). Amplify ETFs+1

  • Simplify MAXI: A bit different—dynamic BTC exposure (50–200%) plus an options overlay for income. More tactical, potentially spicier ride. Simplify

The landscape is evolving quickly, in part because options on spot Bitcoin ETFs opened the door for many strategies and managers to experiment with more “risk-aware” income designs. Expect more filings, including covered-call and buffered/floored variants. Financial Times

Where BTCI stands out: scale and straightforward monthly income around a transparent ETP + covered-call recipe, a strong sponsor with an options DNA, and real-time transparency (distribution calendar, 19a-1 notices, holdings snapshots). NEOS Investments

Practical tips for owning BTCI

  1. Know what you’re trading. BTCI trades on Cboe; liquidity looks healthy, but always consider limit orders, especially outside peak hours. Recent bid-ask spreads ~0.13% and tight premiums/discounts are a plus but can vary with volatility. NEOS Investments

  2. Mind the ex-date. If you’re timing entries around income, BTCI posts a monthly calendar. Buying right before the ex-date gets you the distribution but often results in a similar price drop on pay date; there’s no free lunch. NEOS Investments

  3. Pairing ideas:

    • Barbell with a spot Bitcoin ETF (e.g., IBIT/FBTC/HODL, etc.): Keep some uncapped upside while harvesting income on the BTCI side.

    • Blend with T-bills/short duration if you want to dampen swings—BTCI itself already holds some T-bills for liquidity. NEOS Investments

  4. Reinvest vs. spend: Reinvesting distributions compounds your BTC-linked exposure; taking them in cash monetizes volatility into income today. Align this with your goals (accumulation vs. cash-flow).

  5. What to watch each month:

    • Distribution amount and 19a-1 classification (ROC vs. income).

    • Implied volatility on Bitcoin ETFs (richer IV can mean fatter premiums).

    • Holdings composition (how much BTC ETP vs. T-bills; which ETPs).

    • Tracking vs. spot BTC during rips and dips.

The fine print you shouldn’t skip

BTCI’s own disclosures are refreshingly candid about the risks tied to Bitcoin futures dynamics (contango/backwardation), capacity limits, margin requirements, and the general volatility of derivatives. While BTCI uses options on Bitcoin futures ETFs rather than CME futures directly, the reference asset’s mechanics can still impact results (for instance, a Bitcoin futures ETF’s roll yield or position limits can affect pricing). NEOS Investments

The sponsor also flags spot Bitcoin ETP risk (issuer-specific issues, potential deviations, and swings that can outpace broad markets) and reiterates that distributions can fluctuate and are not guaranteed. NEOS Investments

Performance context

As of July 31, 2025, BTCI showed ~26% YTD on market price with ~60% cumulative since inception, reflecting both Bitcoin’s cycle and the fund’s overlay choices over that span. Past performance, of course, isn’t predictive—and performance will diverge from spot BTC during extremes (that’s inherent to call-writing). NEOS Investments

Who should consider BTCI?

  • You believe in Bitcoin, but your priority is getting paid monthly rather than maxing out blow-off-top returns.

  • You’re comfortable with options mechanics (capped gains, variable premiums) and fund structure (ETP exposure + options overlay + T-bills).

  • You want hands-off execution with institutional discipline, published calendars, and transparent documents. NEOS Investments

Who probably shouldn’t?

  • Max-beta Bitcoin chasers who want uncapped upside in full bull stampedes.

  • Anyone who’d lose sleep when distributions dip in low-volatility windows or during strategy adjustments.

  • Investors who prefer the lowest possible fee over an active overlay.

Final take

BTCI is a clean, purpose-built way to monetize Bitcoin’s volatility into monthly cash flow—a strategy that can make a lot of sense for income-oriented Bitcoin bulls. It won’t be the top performer when Bitcoin goes vertical, and it isn’t designed to be. But for investors who want to participate in the asset class while smoothing the ride and getting paid along the way, BTCI is one of the more mature implementations, with scaling AUM, clear disclosures, and an easy-to-follow calendar of distributions. NEOS InvestmentsETF Trends

As always: This article is for information and education—not investment or tax advice. Do your homework, read the prospectus, and align any allocation with your risk tolerance and goals. NEOS Investments

Sources & further reading

If you want, I can also tailor a short “Should I own BTCI?” checklist you can drop at the end of your blog or convert this into a YouTube script with callouts for charts and B-roll.

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