Summary While the spot Bitcoin ETF (IBIT) delivered a negative return of -14.62% over the last 6 months, the BLOX fund provided investors with a +15.51% Total Return. Fundamental analysis reveals that BLOX's success stems from its use of underlying physical assets and put spreads, whereas YieldMax’s synthetic strategy for LFGY leads to inevitable capital erosion. My stress test indicates that in the event of a 20% Bitcoin drop, LFGY risks losing up to 45% of its NAV. Investment thesis This is the continuation of my series comparing funds with similar management structures and investment strategies. This time, we are looking at the Nicholas Crypto Income ETF ( BLOX ) and the YieldMax Crypto Industry & Tech Portfolio Option Income ETF ( LFGY ), which are notable for their use of option strategies. Since the current market for Bitcoin and cryptocurrency stocks is trending downward, the selection of assets that can demonstrate positive results regardless of the market cycle is important. Taking the last six months as an example, the total return of BLOX is +15.51%, whereas the spot iShares Bitcoin Trust ETF ( IBIT ) is -14.62%. With this in mind, it is of fundamental interest to me to understand the "secret" of BLOX's success and determine whether LFGY can repeat its results or, even better, outperform them. My fundamental analysis has led me to be skeptical about LFGY, so my recommendation for this fund is to "Hold," whereas for BLOX it is to "Buy." This article provides answers to all questions surrounding these funds. Fundamental similarities and differences between BLOX and LFGY The BLOX and LFGY funds are structurally similar exchange-traded funds focused on the development of the crypto industry. If BLOX is characterized by combining exposure to cryptocurrencies (through shares of cryptocurrency companies and ETFs with Bitcoin as the underlying asset) and option strategies to generate high returns, then LGFY is similar in its operating principle, except that it does not include spot ETH-BTC ETFs in its portfolio. In its place, YieldMax's portfolio managers work exclusively with shares of cryptocurrency companies (though not owning them directly). There is a similarity between these funds in their use of options strategies. For this reason, BLOX and LFGY's results are highly volatile and sensitive to the market cycle in the cryptocurrency market. In addition, such funds are essentially designed for a specific target audience of income investors who are willing to accept increased volatility and capital erosion risks in exchange for high returns. The sensitivity of fund performance to volatility reflects their ability to generate high returns. When the price of assets on the cryptocurrency market is more unstable, it becomes more expensive to buy options that portfolio managers sell. As a result, higher premiums are generated. At the same time, this feature limits growth. In other words, if, let's say, Bitcoin prices start to rise again quickly, the funds will sacrifice some of their profits because of the covered call strategy. But there are also differences, mostly related to how they build their portfolios. Check out BLOX, it's got a really balanced structure for a fund dealing with crypto assets. The main chunk is in three spot Bitcoin ETFs, making up 29.11% . This is followed by various assets that are directly or indirectly related to the development of the crypto industry. It even includes shares of companies that belong to the Mag-7. Nvidia, for example, accounts for 3.72% of the BLOX portfolio. Combining such different types of assets makes the fund's portfolio balanced, partially diversified, and included in the overall development of the crypto industry. Top 10 Holdings BLOX LFGY previously focused exclusively on cryptocurrency industry stocks. It mainly included shares of various miners, cryptocurrency treasury holders, and crypto exchanges. But today, it has a bunch of other assets, such as Nvidia shares and the Ethereum spot ETF (iShares Ethereum Trust ETF). Over time, these additions make the LFGY portfolio more balanced and diversified. The majority of the portfolio (11.51%) is made up of options expiring on February 20, 2026. These are long-term options on the underlying asset IBIT with a strike price of $10.01. The portfolios of the funds under review are quite similar in terms of their high concentration among the top 10 assets (56.2% for BLOX and 52.68% for LFGY). Top 10 Holdings LFGY The other difference between BLOX and LFGY lies in their income generation mechanics. Portfolio managers at BLOX employ a combination of selling call options and using put spreads. They do this depending on the market situation, using a modified version of the covered call strategy. The LFGY follows a synthetic scheme, because instead of directly owning shares in selected companies, the portfolio managers create a synthetic long position through options, by selling calls over them. As a result of this strategy, LFGY is characterized by capital erosion. The chart below shows the changes in total returns over the last 6 months (since BLOX began operating on June 16, 2025). The result is that BLOX's total return is 15.51%, whereas LFGY's is a loss of 2.66%. Such results only prove the hypothesis about the huge difference between BLOX and LFGY in terms of investment strategy, portfolio formation approach, and yield generation mechanics. Total Return, 6М Comparative table of BLOX and LFGY characteristics The table below compares the main criteria that distinguish BLOX from LFGY. Many criteria favor BLOX. Firstly, its more structured approach to asset selection and its combined options strategy. Although the risk concentration is more manageable, its asset structure is as high as that of LFGY. Several other metrics have similar values, and the dividend yield does not yet fully reflect the full potential of BLOX, the full extent of which will be determined after the first full year of dividend payments. For this reason, its performance is significantly lower. But for me, the overall return is still more important in assessing the attractiveness of these ETFs, where BLOX has a clear advantage. Criteria BLOX LFGY Key components BTC/ETH ETF + Stocks Crypto Stocks (Basket) Income Source Stock Options and ETFs Covered calls Counterparty Risk Moderate (diversification by class) High (dependence on MSTR and COIN) Beta to Bitcoin ~0.7 – 0.9 ~1.1 – 1.4 Number of Holdings 123 87 Assets in Top 10 56.20% 52.68% P/NAV 1.03х 1.01х Expense Ratio 1.03% 1.02% Short Interest 0.44% 0.05% AUM $215.09M $154.08M Dividend Yield (TTM) 20.94% 87.56% Dividend frequency Weekly Weekly Total Return, 1М 7.15% 3.99% Total Return, 6М 15.51% -2.66% Risks of investing in crypto industry ETFs during Bitcoin correction In one of my recent articles on IBIT, based on technical analysis, I downgraded Bitcoin from "Buy" to "Hold." The weekly chart shows a break below the lower boundary of the global uptrend channel, indicating a potential correction to the key support zone ($74,400–$78,200). This signal is also confirmed by the daily chart analysis, where the medium-term downward trend channel signals a decline to the above-mentioned price zone. Ultimately, it is likely that we will see a continuation of Bitcoin's corrective decline to 20%. Bitcoin Technical Analysis on the 1W Timeframe. Source: Tradingview Suppose this decline does occur. How will ETFs such as BLOX and LFGY be affected? For BLOX, I think the expected drop in NAV will be somewhere between 18% and 25%. Those parts of the fund's portfolio that are made up of spot Bitcoin ETFs, such as IBIT, would fall by exactly the same 20%. On the other hand, shares of crypto companies, including miners and exchanges, would lose somewhere between 30% and 40%. They have a beta of 1.5x to 2.0x relative to Bitcoin volatility. Still, using put spreads and rebalancing the investment portfolio would likely soften the blow. Volatility premiums from selling call options will offset up to 3% of the losses caused by the decline in the value of assets in the portfolio. In the end, fund performance may be comparable to the decline in Bitcoin prices. For LFGY, I expect NAV to drop somewhere between 35% and 45%. The fund's portfolio consists of shares in cryptocurrency companies, sometimes with a beta to Bitcoin volatility even higher than 2.0x. As an example, if Bitcoin's price drops by 1%, the price of MARA drops by 2.5%. Because the fund doesn't directly own the stocks but instead has a synthetic position through options, a moment of market panic can lead to a faster loss in value due to changes in the Greeks. Of course, selling call options partially offsets the loss with the premium received. However, this is likely to be no more than 5%. As with all YieldMax funds, the LFGY is characterized by significant capital erosion when prices collapse, due to which it will be much more difficult to restore the previous value of the shares. This is because selling calls leads to a reduction in potential profits from strong price growth. As a result, the drawdown will be deeper when investing in LFGY. Even though investors will receive higher dividends, capital erosion will be very strong, negatively affecting total returns. Conclusion The results of the comparative analysis between BLOX and LFGY reveal fundamental differences between them, as reflected in the actual performance of the funds. If I had to pick between these two assets, I would go with BLOX, as it has seen positive total return growth over the past six months, whereas LFGY is still in the red. An interesting fact is that if we look at the results of the Bitcoin spot ETF, IBIT, we see that its performance over the same period is even worse (-14.62%). It signals to investors that BLOX portfolio managers, through their options strategy, can offset losses from falling cryptocurrency and cryptocurrency stock prices by using a combination of selling call options and using put spreads. That is why my recommendation for BLOX is "Buy," whereas for LFGY it is "Hold."
