Volatility Shares requests a 3x Bitcoin ETF: BITX lost 79%

Cboe BZX submitted a request to the SEC on August 10, 2026, to list an ETF that triples the daily movement of Bitcoin, and Volatility Shares, the sponsor behind the filing, already has a double-leveraged version trading: BITX closed the year ending June 30, 2026, with its NAV (Net Asset Value, the book price per share) 78.93% lower, while Bitcoin fell 45.39%. The 3x product has not traded for a single day, so there is no NAV to consult. However, its arithmetic can be reproduced using the same price series the 2x fund navigated: using daily Bitcoin closes on Coinbase and the 2.75% fee, the path (the day-to-day progression of equity applying the multiple to each close) of a daily 2x fund in that window yields −76.05% —meaning 96% of BITX's loss is explained by its design— and the same series at 3x yields −91.21%. Two key pieces remain on the SEC's table before October 3: how daily leverage behaves when the path turns sour, and why the 3x is entering the market through a different legal door than the 2x.

What is Cboe BZX asking the SEC in filing SR-CboeBZX-2026-065?

Cboe BZX submitted the proposal on August 10, 2026, and the notice appeared in the Federal Register on the 19th (91 FR 53686, document 2026-16854, Release 34-106137 dated August 14). Cboe BZX proposes to list six funds, all series of the VS Trust and all with a daily target of three times:

• 3x Gold ETF and 3x Silver ETF — gold and silver futures.
• 3x Bitcoin ETF and 3x Ether ETF — CME Bitcoin and Ether futures.
• 3x Crude Oil ETF and 3x Natural Gas ETF — light sweet crude and natural gas futures.

The filing does not hide the problem. In the text, the exchange itself writes that "the funds do not meet the standard set forth in BZX Rule 14.11(e)(4)(F), which prohibits leveraged products." The cited rule states that a trust "may not seek, directly or indirectly, to provide returns that correspond to the performance of an index, benchmark, or reference value multiplied by a specified factor." A product promising three times the daily movement of Bitcoin falls squarely within that prohibition.

The path forward is paragraph (A) of the same rule: the exchange can submit an individual request under Section 19(b) of the Exchange Act to list shares that do not meet generic standards. This is the case-by-case mechanism the market used for years before the existence of generic listing standards approved in September 2025 and expanded in July 2026, whose latest revision (SR-CboeBZX-2026-061, approved July 29, 2026) left the leverage prohibition intact.

The schedule is set in the notice itself: public comments are accepted until September 9, 2026, and the Commission has 45 days from publication —until October 3, 2026— extendable up to 90 days, i.e., until November 17, 2026. As of August 28, a search for the filing in the Federal Register returns a single document: there is no extension Release yet.

How much have BITX and ETHU, the two leveraged products Volatility Shares already has trading, lost?

Volatility Shares LLC, based in Palm Beach Gardens, Florida, is the sponsor of the six proposed funds and also of the two crypto leveraged products it manages as of August 26, 2026: BITX (2x Bitcoin ETF, on the market since June 27, 2023) and ETHU (2x Ether ETF, since June 4, 2024). Figures from their own website, consulted on August 28, 2026:

The two funds combined have $2.391 billion in assets, so the loss did not occur in a marginal product. And the NAV return is externally verifiable: reconstructed with closes adjusted for distributions and splits, the total return for BITX in that twelve-month window comes to −79.02% —nine basis points off the issuer's data— and for ETHU, −79.61%, identical. ETHU also implemented a 1-for-20 reverse split on April 9, 2025, the operation a fund performs when the share price gets too close to zero.

Why did BITX, a daily 2x ETF, lose 1.74 times what Bitcoin lost?

A cloud service with autoscaling maintains a fixed ratio of servers per connected user. If twice as many people log in mid-morning, it starts twice as many machines; if half leave in the afternoon, it shuts half down. The policy is reasonable but produces a known side effect: the daily bill depends not just on how many people were there at the start and end, but on the path demand took in between. A day of continuous entries and exits costs more than one of steady growth with the same final figure.

A daily leveraged ETF does exactly that with its exposure. At the close of each session, it adjusts its futures position so that it once again equals twice the fund's equity. If Bitcoin goes up, equity goes up and the fund must buy more exposure; if it goes down, it must sell. It buys high and sells low, every day, regardless of price: only to fulfill the next day's mandate. This adjustment is called daily rebalancing, and its cumulative effect over weeks and months is compounding.

The limit of the mechanism is that it works just as well in the opposite direction. Between October 1, 2023, and March 13, 2024, Bitcoin rose 161.2% and the path of a daily 2x fund on that same series would have yielded +504.8%, compared to the +322.5% of simply multiplying by two. With a clean trend, rebalancing works in your favor and the result exceeds the promised multiple; with the price oscillating around a mean, it devours it.

The magnitude of this decay has a closed-form expression: half of the product of the multiple times the multiple minus one, multiplied by the asset's annual variance. With Bitcoin's realized volatility in the year ending June 30, 2026 —42.9% annualized— the theoretical drag is 18.4% per year for a 2x and 55.3% per year for a 3x: moving from two times to three times triples the decay. Practical consequence: in the year ending June 30, 2026, BITX lost 1.74 times what Bitcoin lost, not the two times it advertises.

How much would a 3x Bitcoin ETF have lost with the price series BITX navigated?

The following calculation is by CleanSky and is described so that anyone can repeat it. Series: UTC daily closes of BTC-USD and ETH-USD on Coinbase Exchange, 1,159 sessions between June 26, 2023, and August 27, 2026. Method: the previous day's equity is multiplied by the factor (2 or 3) of the daily spot return and the annual fee prorated by calendar day is subtracted, without futures rollover costs, collateral interest, or market impact.

Between June 30, 2025, and June 30, 2026, the 2x path on Bitcoin yields −76.05% compared to the −78.93% BITX NAV published by Volatility Shares: the design explains 96.4% of the loss. Measured in logarithms, the proportion is 91.8%. The remaining 2.9 points are the margin of execution and the actual contract the fund buys.

The second row is the cleanest illustration of the mechanism, because a crash isn't needed to see it: so far in 2026, Bitcoin has fallen 8.25% and the product promising double has lost a third. With 2026 volatility (46.8% annualized), a 3x on the same series would have surrendered 51.66% in eight months with the asset nearly flat.

The third row covers the entire life of BITX. Since it began trading, Bitcoin has risen 90.65% through June 30, 2026. The 2x path on that same rise yields +74.07%, below the asset itself. And the 3x path —the product now seeking to list— comes out to −11.10% between June 27, 2023, and June 30, 2026: three years in which Bitcoin nearly doubles and the triple-leveraged fund loses money. No existing fund recorded that figure; it is the arithmetic of the mandate applied to a price series that already occurred.

Why does BITX's NAV fall more than a theoretical 2x on the Bitcoin price?

BITX does not buy Bitcoin. The Cboe notice describes the same design for the six new funds, and the portfolio published by the issuer confirms it for the existing one: first and second-month CME Bitcoin futures, rolled over a five-day period —roughly 20% of the position each day— starting on the sixth business day prior to the expiration of the front-month contract.

When the next month's contract trades above the expiring one, rolling costs money: this is the contango erosion of Bitcoin futures ETFs, and that difference —the basis— does not appear in any spot price series. It can be bounded by subtraction: to bring the 2x spot path down to the NAV published by the issuer requires an additional cost of 12.02% annually in the year ending June 30, 2026, and about 19% annually since the fund's launch in June 2023. That residual is net —it includes the interest generated by Treasury bill collateral in favor of the fund and tracking error— and its interpretation as a rollover cost is an inference, not a direct measurement of the basis.

The residual decreased by more than a third in the year ending June 30, 2026, compared to the fund's lifetime, which includes the bullish stretches of 2023 and 2024 when Bitcoin futures traded at a premium to spot. A leveraged product on futures pays that basis multiplied by its factor: at three times, the bill rises by 50% compared to what BITX already pays.

Why doesn't the Volatility Shares 3x fit in the same trust as BITX?

The two products from the same sponsor live in two different legal vehicles, and the filing makes this explicit. BITX and ETHU are series of the Volatility Shares Trust, a fund registered under the Investment Company Act of 1940: it files prospectuses in 485BPOS format —the latest covering BITX and ETHU, dated June 26, 2026— and its N-CSR annual report, dated May 8, 2026. The six proposed 3x funds are series of the VS Trust, and the notice states that "neither the trust nor any of the funds will be registered as an investment company under the Investment Company Act of 1940": they are registered under the Securities Act of 1933 and operate as commodity pools, futures vehicles supervised by the CFTC, the U.S. derivatives regulator, with Volatility Shares LLC as the registered operator, U.S. Bancorp Fund Services as administrator, and U.S. Bank N.A. as custodian.

That registration ceased to be a plan on August 17, 2026, two days before the notice reached the Federal Register: the VS Trust filed an S-1 form (file number 333-298396) in EDGAR, the SEC's public registry, the standard securities issuance registration. The notice, written based on a draft, warns that the registration "is not yet effective" and that shares will not trade until it is. The same trust has hosted the SVIX and UVIX volatility products since March 2022.

The regulatory reason for this separation is not in the Cboe filing, which never mentions the rule. It is, however, in the text of the regulation itself: Rule 18f-4 of the Investment Company Act defines the relative VaR test as the condition that "the VaR of the fund's portfolio does not exceed 200% of the VaR of the designated reference portfolio" —VaR is Value at Risk, the maximum expected loss of a portfolio under normal conditions—. Paragraph (c)(5) opens an exception for leveraged or inverse funds, but only if they were in operation as of October 28, 2020, had shares issued to the public, and already declared a multiple higher than 200% in their prospectus, provided they do not subsequently change the index or increase leverage. A fund established in 2026 meets none of those conditions. The reading, with the rule in hand: a new 3x cannot enter through the 40 Act door, and the 1933 Act does not have that VaR limit.

What does the SEC decide regarding the 3x Bitcoin ETF before October 3, 2026, and what does it not decide?

What is on the table is a listing authorization, not a judgment on the product. The Commission decides whether to approve Cboe BZX's rule change, disapprove it, or open a formal proceeding to extend the analysis. The six funds are in the same filing, so gold, silver, crude, and natural gas share the same calendar with Bitcoin and Ether. The ordinary deadline expires on October 3, 2026, and the maximum extension is November 17.

There are three things that no resolution solves. If the SEC approves, the fund will still have no history until it publishes its first NAV, the day after its debut. Approval also does not touch the generic prohibition of Rule 14.11(e)(4)(F), because the process is an individual exception under Section 19(b): every new leveraged product would repeat the journey unless the exchange proposes to change the standard. And nothing the Commission decides modifies the arithmetic of daily rebalancing, the variable that explained 96% of what BITX lost in the year ending June 30, 2026.

To contrast how a Bitcoin ETF behaves when its NAV does literally what it promises, there is the case of BTCI and its 26.73% distribution, another product where the label and the internal mechanics tell different stories.

What would have to appear for the verdict on BITX to no longer hold?

The analysis can be overturned with specific data, and it is worth documenting what those are:

• If the calculated path explained less than 90% of the loss (it yields 96.4% in points and 91.8% in logarithms): the conclusion would downgrade to "the product loses nearly double the asset" and the weight would shift to futures rollover costs.
• If the 3x ended up registered under the Investment Company Act: the S-1 from August 17, 2026, points in the opposite direction, and a change of vehicle would force a redo of the argument regarding Rule 18f-4.
• If the SEC approved without resorting to the individual exception. An approval that modified Rule 14.11(e)(4)(F) would turn the case into a general standard change, with very different consequences for other issuers.
• If the NAV as of September 30, 2026, proves incompatible with the price series. The twelve-month verdict expires as soon as the issuer publishes the next quarter.

For the rest of the crypto fund regulatory calendar, the CME futures six-month clock marks which assets can arrive and when, and what is a spot crypto ETF explains how a fund that buys Bitcoin differs from one that buys futures.

Sources and links: Federal Register, 91 FR 53686 (SR-CboeBZX-2026-065) · Volatility Shares — BITX · Volatility Shares — ETHU · EDGAR — VS Trust S-1 (Aug-17-2026) · eCFR — 17 CFR 270.18f-4 · Coinbase Exchange — daily candles (price series used) · Nasdaq — BITX trading history · Volatility Shares — ETHU reverse split