Bitwise Asset Management, a leading issuer of exchange-traded funds (ETFs), has announced plans to introduce a new ETF focused on businesses with substantial Bitcoin reserves. The Bitwise Bitcoin Standard Corporations ETF is designed to provide investors exposure to companies integrating Bitcoin as a key asset in their financial strategies.
This move aligns with the increasing interest from other financial institutions, such as Strive Asset Management, to leverage Bitcoin’s growing importance in corporate investment strategies.
Unique Approach: Focusing on Bitcoin Reserves, Not Market Capitalization
Unlike traditional ETFs that prioritize a company’s market cap, this new fund will assign weight to companies based on the value of their Bitcoin holdings. To ensure a diversified and balanced fund, however, the maximum weight for any single company will be capped at 25%.
This means that a company like MicroStrategy, which holds a massive 444,262 BTC, could have a greater influence on the ETF compared to larger companies such as Tesla, which owns a much smaller amount (around 9,720 BTC).
Eligibility Criteria for Inclusion in the ETF
To qualify for inclusion in the Bitwise Bitcoin Standard ETF, companies must meet specific requirements:
- Bitcoin Holdings: A company must own a minimum of 1,000 BTC in its corporate treasury.
- Market Cap: The company should have a market capitalization of at least $100 million, ensuring that only businesses of a certain size and stability are included.
- Liquidity: The company needs to demonstrate a daily liquidity of at least $1 million and a public float of under 10%.
These criteria distinguish the fund from others, focusing specifically on companies that have incorporated Bitcoin as a central element in their operational strategies, rather than tracking typical stock performance.
The Rising Role of Bitcoin in Corporate Strategies
In recent years, Bitcoin has become an increasingly popular asset for companies, especially as a hedge against inflation and market fluctuations. High-profile companies like MicroStrategy have made Bitcoin a cornerstone of their treasury strategy, with its aggressive accumulation of Bitcoin setting an example for other firms.
This trend is not exclusive to large enterprises. Smaller companies, such as KULR Technology Group, have also begun investing in Bitcoin. For instance, KULR’s purchase of 217.18 BTC for $21 million led to a remarkable 40% surge in their stock value, showcasing the tangible benefits Bitcoin can bring to a company’s financial performance.
Bitcoin’s price surge in 2024—rising 117%—has further validated its strategic importance for companies. With Bitcoin hitting an all-time high of $108,000 in December, businesses holding large amounts of Bitcoin are seeing impressive returns, while more companies are beginning to recognize the potential of adding Bitcoin to their portfolios.
Strive Asset Management’s Bitcoin Bond ETF: A Different Strategy
On the same day that Bitwise filed for its Bitcoin-focused ETF, Strive Asset Management also made waves with its own filing for a Bitcoin-related ETF.
The Strive Bitcoin Bond ETF would focus on convertible bonds issued by companies with significant Bitcoin holdings, such as MicroStrategy. These bonds are designed to raise capital to fund further Bitcoin purchases, increasing the company’s exposure to the cryptocurrency.
Unlike Bitwise’s ETF, Strive’s fund will primarily invest in Bitcoin-linked bonds and related derivatives like swaps and options. About 80% of Strive’s ETF will be allocated to these Bitcoin-related instruments, with the strategy aiming to offer investors indirect exposure to Bitcoin by leveraging corporate bonds tied to Bitcoin holdings.
Institutional Interest Grows
Both the Bitwise Bitcoin Standard ETF and Strive’s Bitcoin Bond ETF reflect the growing institutional interest in Bitcoin as it becomes more integrated into corporate strategies. While Bitwise’s ETF directly focuses on companies that hold Bitcoin, Strive’s ETF gives investors access to companies’ Bitcoin investments through corporate bonds.
