Bitcoin ‘AfterDark’ ETF targets BTC’s overnight edge, skips U.S. hours

New Nicholas AfterDark ETF plans to hold Bitcoin only overnight and rotate into Treasuries during U.S. hours to exploit BTC’s non-U.S. session outperformance.

Bitcoin has demonstrated a persistent pattern of stronger performance during non-U.S. trading hours over the past year, according to data from crypto analytics firm Velo.xyz, prompting one asset manager to file for an exchange-traded fund designed to capitalize on the trend.

Bitcoin enters choppy waters: analysts

The data shows Bitcoin (BTC) tends to post stronger gains when traditional U.S. markets are closed and weaker or negative returns during standard U.S. trading hours, according to hourly performance breakdowns analyzed by the firm.

Bloomberg Intelligence analyst Eric Balchunas stated the data mirrors patterns observed through much of 2024, suggesting that positioning in spot ETFs and derivatives markets may be influencing price action during regular market hours.

Nicholas Financial Corporation, a boutique wealth manager, has filed with the U.S. Securities and Exchange Commission to launch the Nicholas Bitcoin and Treasuries AfterDark ETF, which would hold Bitcoin only during hours when U.S. markets are closed.

Under the filing, the fund would purchase Bitcoin at 4 p.m. Eastern Time, when U.S. equities stop trading, and sell by 9:30 a.m. the next day, before Wall Street opens. During U.S. market hours, the fund would invest in short-term U.S. Treasury securities.

The strategy represents a departure from traditional spot Bitcoin ETFs, which maintain continuous exposure to the cryptocurrency regardless of time of day. Nicholas Financial also submitted paperwork for a second product, the Nicholas Bitcoin Tail ETF, designed to pursue a risk-managed approach tied to extreme market moves.

Market analysts cited several potential factors contributing to Bitcoin’s performance pattern during U.S. hours. Spot Bitcoin ETFs conduct the majority of their trading and rebalancing during U.S. equity market hours, creating a structural link between the cryptocurrency and broader risk sentiment, according to market observers.

Derivatives markets may also contribute to the pattern, as institutional investors often hedge spot exposure through futures during the U.S. session, which can limit upside moves or amplify downside swings when positioning becomes concentrated, analysts said.

The AfterDark ETF proposal aims to capture Bitcoin’s returns during global off-hours while reducing exposure during periods of U.S. macro headlines, Federal Reserve commentary, and equity market activity. The fund seeks to reduce drawdowns while capturing the asset’s historical gains during overnight hours by pairing Bitcoin exposure with Treasury holdings.

The filing reflects the maturation of the Bitcoin ETF ecosystem, with issuers seeking specialized approaches to differentiate products as dozens of spot and futures-based funds already trade in the market. The proposal also demonstrates growing interest in engineering market microstructure effects into mainstream investment vehicles.

The AfterDark ETF presents regulators with questions about the flexibility of ETF frameworks when issuers structure exposure along time-based dimensions, though the product does not appear to introduce novel custody or market integrity risks beyond existing Bitcoin ETF structures.

Bitcoin’s price behavior continues to be influenced by ETF flows, institutional trading patterns, and global liquidity cycles as the cryptocurrency integrates further into traditional financial systems.