| | Good morning and happy Wednesday. That Citrini Research paper continues to make waves. Not only did the report, affectionately titled "The 2028 Global Intelligence Crisis," send the stock market downward, but it also has traders now betting against the $7 billion Invesco Senior Loan ETF, according to a report in Bloomberg. The Citrini paper was a doomsday thought experiment (not a prediction!) about advances in AI leading to widespread unemployment in the white-collar echelon in the near future. As software-related stocks sank, traders have bought up puts on the ETF, at the highest levels in several years, Bloomberg noted. One investor reportedly bought 30,000 April $20 puts on it Monday, which would start paying off if the software-exposed ETF drops 3.5%. Let's just hope AI doesn't come for snarky financial journalism. | | | | | | *Presented by Motley Fool Asset Management. Stock data as of market close on February 24, 2026. | | | | | | | | | They're calling it the whodunit of the century. It's no secret bitcoin has been having a rough go of it lately, particularly as the digital currency reaches its fourth straight month of selloffs, sitting below $70,000 a coin for the past two weeks. Now, nearly half of the bitcoin currently in circulation is worth less than what its holders paid for it. But who is to blame? While universities are largely holding on, some hedge funds have revamped their entire positions, selling tens of millions of shares in the iShares Bitcoin Trust ETF (IBIT) and other spot bitcoin products. But for most investors, the value of a crypto strategy remains the same. "Right now, people obviously are a bit more cautious, but when it comes to interest and just talking about the topic, we've seen a lot of traction," said Adrian Fritz, chief investment strategist at 21shares. "On the regulatory side, [there's been] a lot of improvement. All of these things lay the groundwork for bigger allocators and bigger institutions to come in." A Rocky Start Despite bitcoin's volatile start to the year, IBIT remains Harvard University's largest position, making up more than 12% of its overall portfolio, although it sold more than 20% in the fourth quarter. Brown and Emory universities also hold significant amounts of the coin via IBIT and Grayscale's Bitcoin Trust (GBTC), respectively. Some hedge funds, however, have slashed their positions, according to recent 13F filings. The hedge fund Brevan Howard reduced its IBIT shares from a peak of 36.7 million to just 5.5 million, according to data compiled by CF Benchmarks. And they're not alone. According to the same data: - The hedge fund DE Shaw reduced its IBIT shares from 9.7 million a year ago to 4.7 million at the end of 2025.
- Schonfeld Strategic Advisors went from having 5.5 million shares in Fidelity's Wise Origin Bitcoin Fund (FBTC) to 2.3 million over the past two quarters.
- Sculptor Capital dropped from 2.2 million to 224,000 shares in FBTC, also over the past two quarters.
  The Long Game. The differences reflect overall strategies rather than emotional buying and selling, said Gregory Guenther, a financial planner with GRANTvest Financial Group. The hedge fund-driven selloffs point to the differing strategies, between institutional and retail investors, since the former have largely been driving the decline. "Institutional investors generally view bitcoin as a volatile satellite allocation inside a diversified portfolio, not as a core holding," Guenther said. "When prices fall sharply, exposure often declines automatically because of internal risk controls, volatility targets or rebalancing rules… Institutions are not reacting emotionally to headlines and sudden price movements." Still, not everyone is spooked. The Emirate of Abu Dhabi actually increased its IBIT position last quarter, according to Bloomberg. Written by Lilly Riddle | | | | | | | | | | | Which lever to pull… Clients have a growing list of options when it comes to ETFs that use leverage. Issuers are prepping new funds almost daily, in some cases even filing for single-stock products focused on companies that aren't public yet. During February, for example, several firms filed for 2x leveraged ETFs built around SpaceX, Anthropic and other tech companies. Some are also trying their luck again with dozens of 3x and 4x products, even after the Securities and Exchange Commission told them last year that anything over 2x doesn't jibe with limits on leverage. But will retail investors want such funds, which for some could present unreasonable levels of risk? Trading Places Traders have used leveraged ETFs heavily during market selloffs since 2020, when the COVID-19 pandemic brought more attention to the product category, according to a report this week from Direxion. But there hasn't been consistency in how the funds are used, in part because the category has expanded so quickly, as it now includes a mind-boggling amount of single-stock ETFs. There were high levels of turnover in 2020 as traders moved between long- and short-leveraged ETFs. Following that, people made long bets against the stock market's slower decline in 2022, Direxion found. And last year, amid President Trump's tariff announcements, leveraged ETF traders bought long funds for 35 days straight, as the S&P 500 fell 19%. "The first day short positions dominated new flows was on April 9, or the stock market's best day in years," the report read. "We've been fortunate these past few years in that the dips have reverted quickly," said Ryan Lee, senior VP in product and strategy at Direxion. "Dip buying in recent years has been very successful." On the whole, it's unclear whether leveraged ETFs have been profitable for investors, though the trends suggest that many people have been using them as intended, Lee said. That is, many users don't hold them for very long and monitor them daily. Still, research from the UK found most investors held leveraged ETFs for more than a single day. "These are meant to be tools in your toolbox. These are not meant to be the only things you hold," he said. In that regard, issuers are planning to add a lot more tools: Yield, Don't Stop: But GraniteShares, which is planning to expand its product roster dramatically, sees the most promise in autocallable ETFs, the first two of which debuted earlier this month, said Matthew Lamb, portfolio consultant at the firm. Those, the GraniteShares Autocallable NVDA and Tesla ETFs, each represent about $1 million in assets. "Our goal is to disrupt the structured note business," Lamb said, pointing to high minimums, low liquidity and considerable fees. "The ETF wrapper is going to present a pretty compelling alternative to that." Written by Emile Hallez | | | | | | | | | As any company served with a Wells notice knows, not all is well. Still, the Securities and Exchange Commission, which has adopted a more industry-friendly approach under Chairman Paul Atkins than his predecessor Gary Gensler, is making the notices slightly easier to manage. The agency unveiled an update to its enforcement manual on Tuesday, doubling the amount of time (four weeks, rather than two) that companies, including ETF issuers, have to respond to Wells notices, which inform them they have been investigated and likely face enforcement actions for securities law violations. That will be a welcome change for financial services companies, which have likened the Wells process to a Kafka novel. "This is a meaningful opportunity for Wells recipients to address key issues of fact or law before an enforcement recommendation is made," Judge Margaret Ryan, director of the SEC's Division of Enforcement, said during a speech earlier this month. "Wells recipients are also typically granted the opportunity to meet with division leadership to 'make their case.'" Changing Priorities The SEC has changed its views on crypto during the new administration, and it now places less emphasis on white-collar infractions and more on cases of individual investors being defrauded: - The agency had issued more than a dozen Wells notices to crypto businesses in 2024, alleging that Coinbase and others provided unregistered securities.
- Last year, the Trump-era SEC dismissed many of the cases.
The enforcement manual changes the SEC just implemented focus on transparency and cooperation between the government and the securities industry. For example, Wells meetings (which happen after a company responds to a notice) will be attended by Division of Enforcement senior leadership. The agency also now considers waiver requests alongside settlement recommendations, which can protect parties "from automatic disqualifications and other collateral consequences that result from the underlying enforcement action," the agency stated in its announcement.
Move Fast, Hopefully Don't Break Things: With the changes, the SEC may be moving more expeditiously, Ryan told the Los Angeles County Bar Association. "Deliberate circumvention of the process, however, including tactical tardiness and other games, will not be tolerated," she said. Written by Emile Hallez | | | | | | | | | |
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