Tidal Trust has filed for a Bitcoin AfterDark ETF designed to capture overnight price movements by buying Bitcoin at the close of U.S. markets and exiting when trading resumes the next morning.

The strategy rests on the premise that a large portion of Bitcoin’s historical returns occurs outside regular market hours due to 24/7 global trading, news cycles, and weaker correlation with intraday stock indices.

The fund would primarily use derivatives, with at least 80% of assets allocated to trading bitcoin futures, bitcoin ETFs/ETPs, and options on those instruments, rather than holding Bitcoin directly.

Net flows have been volatile, with outflows continuing into December but a rebound on December 9 as inflows surged.

Context includes November’s record outflows from US spot Bitcoin ETFs, underscoring ongoing volatility and investor interest in crypto-linked vehicles.

The filing cites risks from Bitcoin’s volatility, network activity, and adoption, plus potential indirect exposure affecting NAV and price, along with competition from other blockchains and Layer 2 tools and the associated security, transparency, and regulatory considerations.

Regulatory and risk factors include evolving SEC/CFTC rules, potential tax treatment issues for commodity pool income, and typical derivatives risks such as basis risk, liquidity under stress, and counterparty defaults.

The filing comes amid growing SEC openness to crypto ETFs, with recent launches and filings from players like REX Shares and BlackRock, signaling a broader shift toward crypto-focused investment products.

Market activity shows rising crypto ETF interest alongside large inflows into U.S. spot Bitcoin ETFs, reflecting broader enthusiasm for crypto-related investment products and regulatory accommodation trends.

The SEC’s increasingly accommodating stance is evidenced by examples such as Ethereum staking ETFs and related filings, indicating a trend toward crypto-related ETFs.

The proposal acknowledges substantial market risk and historical drawdowns, while suggesting the overnight pattern could persist given current trends.

Bitcoin was trading around the low-to-mid $90,000s, with notable daily movement and a mixed year-on-year performance according to market data.