Not A Bitcoin Believer? Collect Income From It With BTCI

Summary NEOS Bitcoin High Income ETF offers a 28%+ yield by monetizing Bitcoin volatility through covered calls and puts, appealing to both skeptics and income-focused investors. BTCI's options strategy caps upside in bull markets but can outperform in flat or volatile Bitcoin environments, with monthly, tax-advantaged distributions. BTCI has underperformed Bitcoin during recent declines, with NAV erosion a key risk, but NAV remains up 15.92% since inception. With Bitcoin potentially having bottomed, BTCI is positioned for attractive income and possible outperformance if Bitcoin stabilizes or recovers. Introduction Bitcoin USD ( BTC-USD ) has been in the headlines lately as the crypto asset has fallen from a high of $126,000 back in October. Whether you believe this is due to a liquidity event or just a healthy pullback, there's a way to take advantage of the decline. How? By buying the NEOS Bitcoin High Income ETF ( BTCI ). Like many investors, I remain skeptical of crypto but have become open to the idea of owning it inside a diversified portfolio. I recently dipped my toe into the iShares Bitcoin Trust ETF ( IBIT ) with a very small position. Despite my skepticism, I do believe Bitcoin is here to stay and will continue to grow over time due to global acceptance and regulatory approvals. But if you're someone who views crypto negatively, you can take advantage of the dip and collect a yield over 28%. In this article, I discuss the fund's strategy, distributions, and why skeptical investors should consider BTCI. Is Bitcoin an Illusion? In my recent IBIT article , I discussed my skepticism regarding Bitcoin. But I thought that now may be a good time to buy, as I believed it may have reached a bottom. Since October, Bitcoin's price has been roughly cut in half. It has since rebounded from roughly $62k and now sits at approximately $71k at the time of writing. I also touched on how I view crypto similarly to Warren Buffett in that investing in it is basically speculation. In the past I've been highly critical of crypto and stated how one day bullish investors would wake up to their crypto assets being erased. But with the continued adoption and regulatory approvals, I now think this is unlikely. I understand that there are many investors who still feel like Bitcoin and other crypto assets are an illusion. Even if you remain skeptical and think crypto assets are worth nothing, you can monetize Bitcoin using covered call ETFs like BTCI. Why BTCI Although Bitcoin has been around for a while now, covered call funds like BTCI have only been around for a short period. The fund was created on October 16, 2024. I think the reason for this is more regulatory approvals and worldwide acceptance. Like many covered call funds, BTCI monetizes BTC-USD by selling options to generate a premium. They also hold U.S. treasuries to generate additional income. To get exposure to Bitcoin, the fund sells options on the underlying ETFs IBIT and the VanEck Bitcoin ETF ( HODL ). Both have 100% exposure to Bitcoin itself. BTCI sells out-of-the-money calls that allow the fund to participate in some of the upside of Bitcoin. With covered call funds, investors should be aware that their upside is usually capped, meaning they won't participate in the full upside of the underlying asset. And they are exposed to all of the downside, if not more, making them high risk. The chart below shows Bitcoin's price decline in the past 6 months. You can see BTCI has fallen harder than the asset itself, down 43.55% compared to close to 40% for BTC-USD. While Bitcoin's price has fallen from $126k, BTCI has fallen from $64 to $35. Seeking Alpha BTCI's calls are usually a month or two out. You can see they have calls that expire on March 20th and April 17th of this year in what is known as a credit spread strategy. They also sell put options, which are expected to provide some downside protection. BTCI This is a bit different from the Amplify Bitcoin Max Income Covered Call ETF ( BAGY ). They use a dynamic overwrite strategy, meaning they sell calls against the shares they actually own in IBIT. Instead of selling separate sets of options at different dates using a credit spread strategy, BAGY often adjusts the frequency, strike prices, and dates depending on market conditions. I believe this gives them better flexibility, as they can choose how much of their portfolio to sell options against. If they leave a portion uncovered, this should lead to more capital appreciation vs. BTCI. Neither IBIT nor HODL distributes income, nor does BTC-USD. That's why, for investors who are skeptical, owning BTCI or other covered call funds that generate income from Bitcoin may be a preferred method. Especially if you're someone who also focuses on income. BTCI's current yield sits at 28.27%. For 2025, distributions have averaged $1.34. And have since been on a decline, likely due to the rapid share price decline of Bitcoin. BTCI For January 2026, distributions rose to $1.0427 a share. Still solid in my opinion. As mentioned previously, the yield is attractive if you're an income-focused investor. And now may be a good time to buy since Bitcoin has recovered somewhat, indicating the bottom may have been reached. BTCI pays on a monthly basis. Another attractive metric is that their distributions are tax favorable. Most are considered return of capital, or ROC. This means the taxes are deferred on your investment until your cost basis reaches zero or you decide to sell. Below is an example of how this would work. Strategy Shares NAV and How the Fund Will Behave As I mentioned earlier, BTCI and other covered call funds should be considered high risk. One huge one is seeing NAV erosion due to prolonged price declines. This can lead to underperformance and huge amounts of capital loss over time. You can see that since Bitcoin and BTCI have declined in the past year, BTCI's NAV has eroded. Although the fund's NAV growth is positive since inception at 15.92%. This is the reason distributions have been somewhat volatile. BTCI Prolonged periods of underperformance in Bitcoin will result in more NAV and price declines for BTCI. But as mentioned previously, the bottom may be in as the asset has rebounded. In Bitcoin Bull Markets If Bitcoin goes on a bull run from here, BTCI will participate in some upside. But due to their options strategy, it will underperform their underlying holdings. But the fund will see higher total returns due to NAV growth and options premiums generated. In Flat/Volatile Bitcoin Markets This is where BTCI will likely shine. The fund could see higher returns due to a stable share price, which could allow them to outperform Bitcoin and their underlying holdings. This could lead to higher distributions generated from Bitcoin volatility. In Bearish Bitcoin Markets In periods like now, BTCI will underperform as NAV erodes, potentially leading to lower distributions. While distributions can offset the steep price decline, it's likely to underperform the asset itself. This is evidenced in the chart earlier showing the performance of Bitcoin vs. BTCI in the last year. Investor Takeaway BTCI presents an attractive investment opportunity due to the fall of Bitcoin in recent months. Moreover, the asset seems to have bottomed, and BTCI could be poised for outperformance as a result. Even if you're a non-believer in Bitcoin, you can collect monthly income with a yield close to 30%. While Bitcoin could be subject to further declines, I think it may have bottomed, and I believe it will grow over time. While skepticism remains, BTCI is an attractive way to profit from it.