By Lewis Braham
What is Microsoft worth? Most active fund managers would be able to make an estimate based on its historical cash flows.
Now try that with cryptocurrencies. Bitcoin produces no cash flow, so it's difficult to evaluate. Yet there are now some 75 actively managed crypto exchange-traded funds, according to Morningstar. Most don't employ traditional fundamental analysis, but one in particular — the newly launched T. Rowe Price Active Crypto — does, depending on the currency.
Manager Blue Macellari sees Bitcoin as a "macro asset" like gold, and analyzes its supply-and-demand dynamics and the economy's inflationary outlook. She studies other cryptos for the value of their blockchain technology. Some, such as Solana and Avalanche, can produce cash flow by what is called "staking," where investors effectively lease their coins to maintain the blockchain network's integrity, receiving a share of currencies' transaction fees. Solana and Avalanche are "supereasy" to perform a modified discounted cash-flow model on, she says.
Yet Macellari acknowledges that crypto price trends — as opposed to underlying fundamentals — still play a major role. "One of the things that makes fundamental analysis in crypto both so interesting and at times unbelievably frustrating is that all the blockchains are like living, breathing things, and they don't stick to an earnings schedule," she says. "You have all the data all the time." The prices of cryptocurrencies can move more swiftly and violently than any gradual shift in fundamental outlooks.
Since its July inception, T. Rowe's tiny $24 million ETF is up some 24%, about on par with the behemoth $65 billion iShares Bitcoin Trust. Other active ETFs have had more time to prove themselves. Many employ options strategies to generate income from crypto's volatility, as the more volatile an asset is, the higher the premium it pays to options sellers.
The $248 million Nicholas Crypto Income ETF has a distribution rate of 36% from selling, or "writing," put options on Bitcoin and Ether — about half its portfolio — and crypto-related stocks such as the volatile BitMine Immersion Technologies. Puts, which give holders the right to sell an asset at a set price within a specific period, generate income without capping any crypto upside. However, this strategy can actually accentuate losses in a downturn if done incorrectly.
Manager David Nicholas can also buy put options to hedge if crypto markets turn ugly. He uses technical indicators based on price trends, not fundamental analysis, to decide when to hedge. Currently, the ETF is unhedged, he says, but it has been hedged often during a difficult 2026. As a result, since the ETF's inception in June 2025, it has notched a cumulative 10.7% loss when including its hefty options payouts, versus iShares Bitcoin's 26.7% loss, according to Morningstar.
Another Bitcoin options ETF, Fortuna Hedged Bitcoin, hedges routinely, selling call options to generate income to pay for defensive put options. "It's Bitcoin exposure with guardrails," says manager Mark Adams, adding that his ETF is more for the "crypto curious" than die-hards. Since its March 2025 inception, the ETF has significantly outperformed Bitcoin during downturns but lagged behind overall after big rallies. (Calls give holders the right to buy an asset at a set price within a specific period.)
The Arrow Valtoro ETF employs systematic quantitative models that include price trends and other macroeconomic factors to determine whether to be in cash, Bitcoin, or gold bullion. Since its October 2025 inception, it's down 2%, while the iShares Bitcoin ETF is down 26%.
The largest active ETF, the $1.4 billion Neos Bitcoin High Income, has a simpler covered-call options strategy to generate income. Call options limit the upside for their sellers, but Neos doesn't write options on the whole portfolio to generate its 25% to 30% target distribution. It can sometimes get that payout with options written on half the portfolio.
Since its October 2024 inception, Neos is up 13% cumulatively, including options payouts, versus the iShares Bitcoin ETF's 17%. In the past 12 months, it's down 27% versus the iShares ETF's 28% loss.
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