Bitcoin ETFs taking off with Bitwise and Strive Financial
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Bitcoin ETF creators craft novel strategies for upcoming products
As Bitcoin gains traction in the financial world, more innovative products are emerging. In response to the success of Bitcoin ETFs, asset managers Bitwise and Strive Financial are looking to launch ETFs that invest in public companies with large Bitcoin reserves. This follows in the footsteps of Microstrategy, which keeps piling up more Bitcoin through borrowing.
Bitwise Bitcoin Standard Corporations ETF: Investing Indirectly in Bitcoin Giants
Two ETFs have been submitted for approval. One is the "Bitwise Bitcoin Standard Corporations ETF". As per the prospectus, eligible companies must have at least 1,000 Bitcoin in their reserves - a threshold that only companies like Microstrategy are likely to meet as of now.
Other criteria include a minimum market capitalization of $100 million and a daily trading volume of at least $1 million. In this ETF, investment weighting will not be based on market capitalization, but on the amount of Bitcoin held.
Strive Financial's Income-Focused Bitcoin Bond ETF
Vivek Ramaswamy, co-founder of Strive Financial, also plans to launch a Bitcoin ETF. Ramaswamy founded Strive Asset Management in early 2022 with an investment of $20 million from notable figures like Peter Thiel, J.D. Vance and Bill Ackman.
The "Strive Bitcoin Bond ETF" targets convertible bonds like those issued by Microstrategy, with funds typically being used to purchase Bitcoin. Unlike the Bitwise ETF, this one does not weight investments, allowing it to focus on a select few bond investments.
The climate for ETFs offering Bitcoin exposure is positive. The new US administration under Donald Trump has set the stage forcrypto-friendly regulation, spurring further investment in the sector. Additionally, holding Bitcoin as a reserve is a growing trend across the industry, with proposals suggesting central banks should maintain Bitcoin reserves alongside traditional currencies. Although Trump supports this, it currently remains a low priority, and the Federal Reserve’s investment policies would need to be adjusted first. In Germany, former Finance Minister Christian Lindner has advocated for the European Central Bank to consider including cryptocurrencies like Bitcoin in their reserves, although neither the ECB nor the Bundesbank have shown any interest in this yet.
Ramaswamy has recently been in the spotlight for his plan, along with Elon Musk, to lead the Department of Government Efficiency (DOGE) and streamline US government bureaucracy. Ramaswamy, Musk and others believe that billions of dollars in taxpayer money are being wasted on administration, with Javier Milei's radical approach in Argentina serving as an example. Reducing the so-called "deep state" is a top priority for Trump.
Investment Strategies Explained
The Bitwise Bitcoin Standard Corporations ETF focuses on investing in companies that heavily hold Bitcoin, offering indirect exposure to Bitcoin’s price movements. It primarily targets companies with large Bitcoin treasuries as their assets, rather than investing directly in Bitcoin itself.
On the other hand, the Strive Bitcoin Bond ETF seeks to generate income through Bitcoin-related financial instruments, particularly via employing option income strategies. It uses a "covered call" approach, selling call options on Bitcoin-related equities (like stocks such as MicroStrategy, Coinbase, and Marathon Digital Holdings), while maintaining long positions in those stocks. This strategy aims to create monthly income from option premiums, while also allowing some participation in the underlying equity appreciation, although with a capped upside due to the call options sold.
Overall, the Bitwise Bitcoin Standard Corporations ETF provides an indirect approach to Bitcoin ownership via company balance sheets, concentrating on firms with substantial Bitcoin holdings. The Strive Bitcoin Bond ETF, by contrast, is an income-focused fund that generates monthly income from Bitcoin-equity volatility through covered call writing, with a partially capped participation in Bitcoin gains due to the option premiums.[1][4]
[1] Actively managed daily by experts in crypto and institutional derivatives, the Strive Bitcoin Bond ETF optimizes income and growth, balancing momentum, regulatory news, options pricing, and market sentiment.
[4] The Bitwise Bitcoin Standard Corporations ETF typically includes companies with substantial Bitcoin holdings to ensure the ETF mirrors businesses fully committed to Bitcoin treasury adoption.
- Bitwise and Strive Financial are introducing new ETFs that invest in public companies with significant Bitcoin reserves, following Microstrategy's lead in borrowing and amassing Bitcoin.
- The Bitwise Bitcoin Standard Corporations ETF focuses on companies with substantial Bitcoin holdings, offering indirect exposure to Bitcoin's price movements through their assets, as opposed to investing directly in Bitcoin.
- Strive Financial's proposed ETF, the Strive Bitcoin Bond ETF, aims to generate income through Bitcoin-related financial instruments, particularly via option income strategies like the covered call approach, selling call options on Bitcoin-related equities while maintaining long positions.
- The growing trend toward holding Bitcoin as a company reserve is creating a positive climate for ETFs offering Bitcoin exposure, with potential changes in crypto-friendly regulations and central banks considering Bitcoin reserves alongside traditional currencies.
