U.S. market indices closed Wednesday at all-time highs following Donald Trump’s victory over Vice President Kamala Harris in the U.S. presidential election. Shares of Coinbase (ticker: COIN) surged more than 30% in the trading session, closing the day near year-to-date highs, but one volatile ETF did twice as well.
The GraniteShares 2x Long COIN Daily ETF (CONL) closed the session up 62%, possibly setting a record one-day return for an ETF, according to Bloomberg ETF analyst Eric Balchunas.
"It also traded about $1b and now has close to $1b in assets," Balchunas said in a post on X. "Another hot sauce hit from GraniteShares who recently struck gold w $NVDL (now $6b). What a country."
A leveraged exchange-traded fund uses financial derivatives and debt to amplify the daily returns of an underlying security. Traditional ETFs typically track the securities in their underlying index on a one-to-one basis, while a leveraged fund may aim for a 2:1 (or higher) ratio. These funds are typically meant to be short-term plays for experienced traders because of the high risk involved. This has led Blachunas and other industry experts to call these crypto-tied ETFs "ghost pepper" or "hot sauce" funds.
"We definitely think there is a demand for it," Tuttle Capital CEO Matt Tuttle said earlier this summer. "There's a whole bunch of degens out there who love to trade this stuff."
Wednesday's moves came on a big day for both the stock indices and cryptocurrencies, which saw the price of bitcoin hit a new all-time high above the 75,000 level. In fact, 16 of the top exchange-traded funds saw one-day trading flows of $22 billion, which Balchunas said is usually a good week for the funds.
"A Trump-inspired gusher of cash is flowing into risk-on ETFs," he said in a separate post on X. "YTD net flows now +$856b, (55b away from a record) and the rolling 1yr has passed $1T (have a feeling the "T" will be there for a while)."
The 12 spot bitcoin ETFs, most of which debuted in January, traded over $6 billion on Wednesday. This marked their highest daily total since March 14.
For its part, Coinbase said on Oct. 30 that its board of directors had authorized a $1 billion share repurchase program. The crypto exchange ended the third quarter with $8.2 billion in USD resources, an increase of $417 million from the previous quarter. CEO Brian Armstrong also weighed in on Trump's victory.
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