As an analyst with a background in both finance and technology, I find the emergence of Bitcoin Bond ETFs intriguing. Having followed the crypto market closely for years, I’ve seen its volatility firsthand, but also its potential as a new asset class. The strategy employed by MicroStrategy, investing billions into Bitcoin, has been quite successful, with their stock outperforming nearly every sizeable public company except Nvidia.
Vivek Ramaswamy’s asset management company, Strive, has applied to U.S. regulators for approval to launch an exchange-traded fund (ETF) that will invest in convertible bonds issued by companies like MicroStrategy, which have purchased Bitcoin (BTC). This is as stated in a filing dated December 26th.
The ETF seeks to offer exposure to “Bitcoin Bonds,” described as “convertible securities issued by MicroStrategy” or by other companies that plan to “invest all or a significant portion of the proceeds to purchase Bitcoin,” according to the filing.
The Strive Bitcoin Bond Exchange-Traded Fund (ETF) is designed to be actively managed, providing investment in “Bitcoin Bonds” either by purchasing the bonds themselves or through alternative financial instruments like swaps and options, according to Strive.
It remains undetermined what the management fee will be for investors, however, it’s common that actively managed funds tend to cost more compared to passively managed index funds.
Bitcoin bonds
Starting from the year 2020, MicroStrategy, under the leadership of its co-founder Michael Saylor, embarked on an endeavor to invest around $27 billion in Bitcoin as part of their strategic approach for managing corporate assets.
Among a substantial number of public companies, only Nvidia’s performance surpasses that of MSTR’s stock, which has experienced a remarkable increase of over 2,200%.
MicroStrategy funded these purchases by selling new shares and also offering convertible bonds. These bonds have either low or no interest rates, but they can transform into MSTR stocks under specific circumstances.
Many other businesses have adopted the same practice. As of now, corporate treasuries are estimated to possess around $56 billion in Bitcoin, based on data from BitcoinTreasuries.net.
Related: These crypto ETFs are ‘call options’ on the US elections
Trump connection
In 2022, Ramaswamy, a vocal supporter of President-elect Donald Trump, established Strive. As stated on their website, this financial management firm aims to enable investors to leverage the potential of capitalism.
2023 saw Ramaswamy, a self-made billionaire primarily amassing his fortune through the creation of biotech company Roivant Sciences, actively opposing Trump during the Republican presidential primaries.
Later on, I found myself backing the newly elected leader. In the chilly month of November, I stepped up alongside Elon Musk, Tesla’s pioneer, to head the Department of Government Efficiency (DOGE). This was a personal initiative we took on, aimed at trimming unnecessary government expenditures.
According to industry experts, more than a handful of crypto Exchange-Traded Funds (ETFs) that are currently pending regulatory approval in the U.S. may be listed following Donald Trump’s presidential victory, as it is perceived as a favorable environment for their launch.
2024 saw a surge of regulatory applications from asset managers aiming to list ETFs that would hold various cryptocurrencies such as Solana, XRP, and Litecoin, along with several others.
After his victory in the U.S. Presidential election on November 5th, Trump has suggested placing pro-cryptocurrency leaders at the helm of crucial regulatory bodies.
In December, the newly elected President appointed David Sacks, a former top executive at PayPal, as his advisor on artificial intelligence and cryptocurrency matters, and selected Paul Atkins, a previous SEC commissioner, to serve as the chairman of the Securities and Exchange Commission.
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2024-12-26 23:38