Strive and Bitwise File for ETFs Investing in Firms with Bitcoin Treasuries

Highlights:

• Bitwise filed for an ETF targeting companies holding substantial Bitcoin reserves.
• The ETF prioritizes Bitcoin holdings over market size, with a 25% cap on holdings.
• Strive files for Bitcoin Bond ETF to invest in convertible bonds from Bitcoin-focused companies.

On Dec. 26, Bitwise Asset Management submitted a filing to launch an exchange-traded fund (ETF) focused on stocks of companies holding substantial Bitcoin reserves. The proposed “Bitwise Bitcoin Standard Corporations ETF” would target companies that embrace the “Bitcoin standard” and possess a minimum of 1,000 Bitcoins. They must have a market capitalization of at least $100 million. Their daily liquidity should be at least $1 million. Additionally, less than 10% of their stock can be privately held.

The ETF does not weigh companies based on their market size, unlike most funds. Instead, it prioritizes the value of their Bitcoin holdings. MicroStrategy, with an impressive 444,262 BTC, would dominate the ETF. Despite owning only 9,720 BTC, Tesla has a much larger market capitalization. However, each holding is capped at 25% to maintain balance.

This comes as public companies buy Bitcoin to increase their stock prices, with the cryptocurrency rising 117% this year. Bitcoin surpassed $100,000 for the first time last month, reaching a peak of about $108,000 in December. However, it has since fallen to around $95,800.

Strive Files for ‘Bitcoin Bond’ ETF

Another offering was filed for by Strive, an asset manager co-founded by Vivek Ramaswamy has submitted a filing to U.S. regulators on Dec. 26. Ramaswamy is set to co-lead the Department of Government Efficiency (DOGE) with Elon Musk. Strive plans to launch an ETF that would invest in convertible bonds issued by MicroStrategy and other corporate Bitcoin buyers.

Strive, a company founded by Vivek Ramaswamy, files for a “#Bitcoin Bond” ETF. pic.twitter.com/bGCQgLPlEZ

— TFTC (@TFTC21) December 26, 2024

The ETF seeks to offer exposure to “Bitcoin Bonds.” These are convertible securities issued by MicroStrategy or other companies. According to the filing, these companies plan to invest all or a significant portion of the proceeds in purchasing Bitcoin. Strive Bitcoin Bond ETF will gain exposure to these bonds either by buying them directly or through financial tools like swaps and options. It lets investors invest in companies that hold significant amounts of Bitcoin without directly owning the cryptocurrency.

The Strive Bitcoin Bond ETF focuses on a few companies, like MicroStrategy. Its performance depends on MicroStrategy’s Bitcoin investments. It will trade on the New York Stock Exchange and be managed by Empowered Funds, LLC. This manager can hire or replace sub-advisers without needing investor approval.

Bitcoin Bonds

MicroStrategy, led by co-founder Michael Saylor, started buying Bitcoin in 2020. This was part of a corporate treasury strategy. The company has spent around $27 billion acquiring Bitcoin. This move has increased its stock, MSTR, by over 2,200%, outperforming nearly every other major public company, including Nvidia.

MicroStrategy financed these Bitcoin purchases by issuing new stock and convertible bonds. These bonds typically offer low or no interest and convert into shares under specific conditions. Other corporations have followed MicroStrategy’s lead. Corporate treasuries now collectively hold about $56 billion worth of Bitcoin, according to BitcoinTreasuries.net.

Bitwise files for Bitcoin Standard Corporations ETF…

Would own stocks of companies that have adopted the “bitcoin standard”, which they define as holding at least 1,000 btc in corporate treasury.

The btc treasury operations virus is spreading. pic.twitter.com/me0XXX9a6g

— Nate Geraci (@NateGeraci) December 26, 2024