Bitwise's new ETF will invest in publicly traded companies that hold large amounts of Bitcoin, with an allocation strategy based on the BTC value held by each company.
Bitwise launches ETF investing in companies holding Bitcoin
On December 27, asset management firm Bitwise filed with the U.S. Securities and Exchange Commission (SEC) to launch a new ETF called the "Bitcoin Standard Corporations ETF", aiming to invest in companies that hold large amounts of Bitcoin in their treasuries.
Bitwise files for Bitcoin Standard Corporations ETF…
— Nate Geraci (@NateGerci) December 26, 2024
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
Specifically, to be eligible for this ETF, companies must meet strict criteria, including:
- Holding at least 1,000 BTC in their treasury.
- Market capitalization above $100 million, ensuring the size and stability of the business.
- Average daily trading volume above $1 million, allowing the fund to easily buy and sell the stocks.
- Free float ratio below 10%, ensuring liquidity and accessibility for investors.
The unique feature of Bitwise's new ETF is its allocation methodology. Instead of basing it on market capitalization like traditional ETFs, this fund will use a novel approach of weighting based on the BTC value held by each company.
This means that medium and small companies that have heavily invested in Bitcoin may take up a larger proportion, even surpassing larger corporations with relatively modest Bitcoin holdings.
This strategy not only reflects Bitwise's high regard for the vision and commitment of these businesses towards Bitcoin, but also opens up opportunities for investors to discover "hidden gems" in the market. Some notable names expected to be included in the fund include Tesla, Microstrategy, Semler Scientific, and Metaplanet.
Public companies holding over 1,000 BTC. Source: BitcoinTreasuries (December 27, 2024)
Additionally, Strive - the asset management company co-founded by Vivek Ramaswamy, has also filed for a new ETF called the Bitcoin Bond ETF. According to the prospectus, this ETF is expected to invest in convertible bonds of MicroStrategy and other companies that Strive anticipates will use most or all of the proceeds from the bonds to purchase Bitcoin (referred to as "Bitcoin Bonds").
JUST IN: Vivek Ramaswamy's Strive Asset Management files for a "#Bitcoin Bond ETF" with the SEC 🇺🇸 pic.twitter.com/qyUErvXsxn
— Bitcoin Magazine (@BitcoinMagazine) December 26, 2024
Unlike Bitwise's new ETF, the Bitcoin Bond ETF is classified as "non-diversified." This means the fund may concentrate its investments in a few companies without being bound by specific weighting requirements.
Strive's strategy presents both opportunities and risks for investors. On the positive side, the fund may optimize returns by focusing on carefully selected companies, particularly MicroStrategy with its proven DCA Bitcoin strategy. However, the lack of diversification also means the fund will face higher risks, as its performance will be significantly dependent on the financial condition and strategies of the bond-issuing companies.
The "Bitcoin accumulation" trend is emerging as a promising financial strategy adopted by many large companies worldwide. The year 2024 witnessed a surge in this wave, with a host of notable names such as Semler Scientific, Metaplanet, SOS Ltd, and the most recent KULR Technology boldly incorporating Bitcoin into their strategic reserve assets.
The announcement of using Bitcoin as a reserve asset has also created remarkable boosts to the stock prices of many companies. The remarkable "turnaround" story of Metaplanet is the clearest evidence of the power of this strategy.
Before Bitcoin, Metaplanet had gone through a long period of financial difficulties, struggling for 7 years in a crisis. However, the decision to include Bitcoin in its reserve assets completely changed the company's fate. Not only did it help Metaplanet avoid bankruptcy, but Bitcoin also contributed to a more than 21-fold increase in the company's stock price within just one year.
Metaplanet stock price statistics from the beginning of 2024. Source: Google Finance (December 27, 2024)
Compiled by Coin68
