Digital Assets

Can Leveraged ETFs Turn Safe Havens Into Risk Assets?

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Ever since a centralized form of currency was invented, both rich and poor members of the public have been exposed to potential devaluation and inflation of the currency, going as far as Ancient Egypt or the Roman Empire. This is why alternative currencies like gold, silver, and, more recently, Bitcoin and other cryptocurrencies always have a place alongside state-controlled currencies and fiat currencies.

However, how investors gain exposure to such alternative money forms can change how they affect returns and overall financial stability. Direct purchases or sales are not the same as acquisitions through more complex derivatives, like ETFs. Long and short ETFs and leveraged ETFs can radically change how safe such investments turn out, for both the individual investor and the financial system as a whole.

The impact of these financial derivatives was recently analyzed in a publication by Nikolaos A. Kyriazis, a researcher at the University of Thessaly in Greece, who found that some of these can be destabilizing. He published his findings in Finance Research Open1, under the title “(De)stabilizing forces of money-based leveraged ETFs amid crises“.

Managing Inflation

As ever, after a period of inflation, the post-2020 period has brought to the forefront the necessity to re-examine optimal asset allocation to avoid poor performance and enhance resilience to systemic risk.

It has also fueled the debate about the new money forms like Bitcoin (often promoted as “digital gold”) or a return to more ancient forms like physical gold and silver.

It is for this reason that this research investigates a few key questions:

  • Are precious metals the only hedges against systemic risk?
  • Is betting against money-based ETFs a trustworthy hedging tool?
  • Do the hedging abilities of money-based ETF systems vary depending on the number of money types considered?

Analyzing The Impact Of Money ETFs

Gathering The Dataset

This study gathers data from a few ETFs to represent the main forms of money-based ETFs:

  • Precious metals ETFs with ProShares Ultra Gold ETF (UGL ) and the ProShares Ultra Silver ETF(AGQ ).
  • 2x Short ETFs for betting against precious metals with ProShares UltraShort Gold ETF (GLL ) and the ProShares UltraShort Silver ETF(ZSL ).
  • The corresponding national currencies ETFs were represented by ProShares Ultra Euro ETF (ULE ) and ProShares Ultra Yen ETF(YCL ), as well as the equivalent 2x ETFs ProShares UltraShort Euro ETF (EUO ) and ProShares UltraShort Yen ETF (YCS ).
  • For cryptocurrency, the selection was the 2x ETFs ProShares Ultra Bitcoin ETF (BITU ) and ProShares Ultra Ether ETF (ETHT ) and their short counterparts, the ProShares UltraShort Bitcoin ETF (SBIT ) and ProShares UltraShort Ether ETF(ETHD )

Daily price points were used for each of these ETFs, covering the period from 10 March 2024 to 5 June 2026.

Preliminary Results

When looking at financial returns, this period showed that ETFs based on gold and silver are the best-performing assets in distressed times, while the Ether-based ETF had the poorest performance.

The most volatile ETFs were both Bitcoin and Ether ETFs, followed by silver.

The researcher then analyzed the connection between these ETFs, especially the strength of net causal spillovers, which is indicated by the thickness of the arrows in the graphs below; the blue node denotes that this variable is a net source of spillover effects, whereas the yellow node indicates that this variable is a net receiver of spillover impacts.

For long ETFs, the national currencies system is examined, and it is revealed that silver is the main stabilizer (net receiver) while the Euro is the primary source of risk (net generator). It also shows the safe haven and stabilizing role of gold, and that systemic risk is mainly caused by Ether.

For the short ETFs, gold is the key stabilizer against fluctuations in national currencies and cryptocurrencies jointly. In that context, gold is revealed to absorb systemic risk caused by short positions in riskier types of currencies and function as a stabilizer against volatility stemming from downward movements.

When analyzing the link between short and long ETFs, it showed that gold is a strong net source of causality against national currencies’ short selling but a strong net absorber of spillovers from cryptocurrency short selling.

Implications For Investors

Complex Hedging Strategies

From the links between money-ETF in this study, the study concludes that modestly risk-averse investors can stabilize their portfolios by betting on the influence of inflationary phenomena on currency depreciation.

Meanwhile, strongly risk-averse economic agents should use gold to stabilize their wealth levels when cryptocurrencies fail to perform well.

Another revealing data point is that taking advantage of poor performance in gold and silver offsets the losses from subsequent instability in national currency values.

This also reveals that the interplay between crypto and precious metals can be complex, as when long crypto positions are combined with short positions on other money-based ETFs, betting on bad crypto performance stabilizes against risk caused by silver.

Overall, the trend for each monetary asset is as follows:

  • Gold is the main stabilizer
  • Silver generates systemic fragility
  • Cryptocurrency ETFs can switch roles with precious metals ETFs
  • National currency ETFs prevent precious metals ETF bubbles, safeguarding stability

“Gold is the main stabilizer but silver and Ether destabilize the financial system. Precious metals increase the fragility of cryptocurrency markets while cryptocurrencies make systems inclusive of all money forms less resilient to spillovers in bull markets.”

ETFs As Potential Sources Of Risk

Overall, this study also highlights a fact that every investor should acknowledge: daily leveraged products are tactical instruments, not static long-term portfolio hedges.

Leveraged ETFs can turn supposedly defensive assets into regime-dependent risk trades. Gold, Bitcoin, Ether, currencies, and silver do not retain fixed hedge characteristics once investors use daily-reset 2x and inverse products.

This also put to rest simplistic questions like “Is gold or Bitcoin the better hedge?” Instead, a carefully crafted and data-driven portfolio should take into account systemic risk, the role of national currency cash, in addition to crypto and gold, and be wary of more volatile and more risky quasi-currencies like silver.

So the important question is not which asset is “safe,” but how leverage, compounding, investor sentiment, and cross-asset correlation can rapidly change the role an ETF plays inside a portfolio, and how leverage is, as always, a source of both potential extra profit and high risks.

Investing In ETFs

CME Group Inc.

(CME )

As financial systems get more and more complex with new derivative products, both retail and institutional investors are building increasingly advanced and complex portfolios. This is directly benefiting the financial institution building such ETFs and the associated indexes. Upcoming tokenization of stocks and 24/7 trading through blockchain should increase further trading and investing activities.

Data to build and assess such a portfolio are also increasingly valuable. So platforms that can provide high-frequency data and actionable trading data are likely to benefit from such academic research.

CME is a massive marketplace active in all sorts of trading covering all commodities (agricultural, energy, metals), as well as carbon credits, treasuries, foreign exchanges, indexes, equities, cryptocurrencies, etc.

The company has quickly grown its revenue from around ~$3B in 2015 to ~7B expected in 2026.

It is also quickly internationalized, with non-US activity growing 10% CAGR and a sales presence in 12 countries, covering ~13,000 clients worldwide.

Overall, this growth pattern can be expected to hold and the company to benefit from many financial innovations, from blockchain to carbon trading and U.S. mortgage futures, as well as ever-growing adoption of ETFs in trading, including to get exposure to alternative forms of money like cryptos and precious metals.

Source: CME

Latest CME Group (CME) Stock News and Developments

Study Referenced

1. Nikolaos A. Kyriazis. (De)stabilizing forces of money-based leveraged ETFs amid crises. Finance Research Open. Volume 2, Issue 3, September 2026, 100145. https://doi.org/10.1016/j.finr.2026.100145

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Jonathan is a former biochemist researcher who worked in genetic analysis and clinical trials. He is now a stock analyst and finance writer with a focus on innovation, market cycles and geopolitics in his publication 'The Eurasian Century".