Wealth management firm Nicholas Financial Corporation has officially filed an application with the U.S. Securities and Exchange Commission (SEC) to launch the AfterDark Bitcoin ETF, an innovative investment product designed to hold the cryptocurrency solely during overnight hours. This strategy seeks to capitalize on historical patterns suggesting that the digital asset tends to perform better when traditional U.S. markets are closed, offering an alternative to investors frustrated by daytime dips.
The proposal, identified under the ticker NGTH, outlines a systematic daily rotation mechanism where the fund would acquire Bitcoin at 4:00 p.m. ET, coinciding with the New York Stock Exchange close. Subsequently, the fund would sell its cryptocurrency holdings at 9:30 a.m. ET the following day, just before the regular session opens, to avoid the negative volatility that often characterizes U.S. trading hours. During the day, capital would be invested in short-term U.S. Treasury bonds, aiming to preserve value and generate additional yield.
On the other hand, this initiative stems from a detailed observation of market behavior. Many Bitcoin bulls have noted with frustration how prices seem to rise while they sleep, only to descend once the workday begins in the United States. Data from analytics platform Velo.xyz confirms this is not a collective imagination: over the past year, Bitcoin has shown a higher probability of being green outside regular U.S. hours and red when Wall Street is operational.
Why would investors prefer a strategy that avoids U.S. hours?
The logic behind this fund lies in the observed disconnect between global markets and the North American session. Eric Balchunas, an analyst at Bloomberg, noted that this outperformance during off-hours has remained consistent in 2024, suggesting that spot ETF positioning or derivatives could be influencing this dynamic. By avoiding the hours of highest institutional or retail selling volume in the U.S., the fund aims to smooth the performance curve for its holders.
Likewise, Nicholas Financial is not limiting itself to a single product, as it also submitted paperwork for a second investment vehicle named the Nicholas Bitcoin Tail ETF (BHGD). However, the focus of the overnight fund represents a novel twist in the ecosystem, treating time of day as a key factor in its asset allocation strategy. Financial companies are constantly looking for ways to differentiate themselves in a saturated market, and segmenting temporal exposure offers a unique risk management tool.
Can this hybrid approach mitigate the inherent volatility of the digital asset?
This hybrid model of alternating between crypto assets and safe government debt during the day could attract conservative investors who want Bitcoin exposure but fear intraday drops. The ability to take refuge in Treasury bonds during hours of highest turbulence provides an automatic defensive security layer, eliminating the need for the investor to actively manage their entry and exit positions daily.
To conclude, if regulators approve this application, the market would see the birth of a new category of time-based structured products. Nicholas Financial’s proposal validates the growing sophistication of the sector, recognizing that not all trading hours are equal in the crypto world. The SEC is expected to thoroughly review this structure before giving the green light, which could open the door to more investment strategies based on temporal behavior data.
