Key Points
- FIAT offers an extraordinarily high distribution rate of nearly 56%, but it primarily returns investors' own capital, with only a mid-single-digit yield.
- FIAT uses a synthetic short position on Coinbase through options, avoiding direct share borrowing, but this strategy has underperformed, with its stock price dropping nearly 84% in the past year.
- Coinbase has seen a remarkable recovery in 2024, with trading volume up 148% and revenue up 111%, though its stock trades at a high valuation of 11 times sales.
- FIAT's complex structure, high expense ratio of 0.99%, and reliance on cash-secured puts make it a less attractive option compared to directly shorting Coinbase or investing in stable dividend ETFs.
Summary
This article examines Coinbase (NASDAQ: COIN), a leading cryptocurrency exchange, and the Tidal Trust II - YieldMax Short Coin Option Income Strategy ETF (FIAT), which simulates a short position on Coinbase. Coinbase, after a volatile journey since its 2021 listing, hit a low of $32.53 in 2022 due to market headwinds but rebounded strongly in 2024 with a 148% surge in trading volume and 111% revenue growth, trading near its all-time high of $356. However, its high valuation raises concerns about sustainability amid potential market cooling or competition. FIAT, designed for income with a 55.6% distribution rate, largely returns investors’ capital (93% ROC) and charges a 0.99% expense ratio, yielding only a single-digit return. Its synthetic short strategy via options on Coinbase has failed, with an 84% stock price drop over the past year. The article advises against FIAT, suggesting direct shorting of Coinbase for bearish investors or stable dividend ETFs for income seekers, highlighting FIAT’s complexity and underperformance as key drawbacks.