Bitwise Asset Management isn’t afraid to go first into the crypto wild west with a new ETF that aligns with firms that are embracing the “Bitcoin standard”. The Bitwise Bitcoin Standard Corporations ETF is set to reportedly invest in companies that hold large amounts of Bitcoin and make Bitcoin a core asset in corporate treasuries.
Criteria for Inclusion: Companies that meet the Bitcoin Standard
In its December 26, 2024, filing with the Commission, Bitwise outlined some tough criteria for which companies will be included in the ETF. Specifically, to qualify, a company:
- Has to hold at least 1,000 BTC in treasury.
- Has to have a market cap of at least $100 million.
- Has to have average daily liquidity of at least $1 million.
- Have a public float of at least 10%.
The ETF will assign a weighting to stocks that have a certain amount of Bitcoin held in their vaults; the aggregate participation in the ETF by any single stock would not exceed 25 percent. This novel approach shows how Bitcoin is becoming a central part of remit in corporate finance as firms engineer growing demand for Bitcoin-dedicated investment products.
Public Companies Adding Bitcoin
The ETF proposal comes as more and more public companies are adding Bitcoin to their balance sheet as a strategic reserve asset. Bitcoin’s 2024 performance, which went up by 117% and briefly hit $100,000 in November, has corporate Bitcoin adoption on everyone’s lips.
Notable examples include KULR Technology Group which just bought 217.18 BTC for $21 million. On December 16,, their stocks surged 40% to mount an all-time high of $4.80.
MicroStrategy continues to dominate the news as it has pioneered and embraced corporate adoption of Bitcoin. For now, they have over 158,000 BTC in their corporate treasury, so they meet the Bitcoin standard.
Competing Proposals: A New Wave of Bitcoin ETFs
Bitwise isn’t the only one looking at Bitcoin ETFs. Strive Asset Management, founded by Vivek Ramaswamy, just filed for a separate Bitcoin Bond ETF.
This fund is likely to invest in convertible bonds issued by Bitcoin-biased companies like MicroStrategy as a more appropriate vehicle for institutional and retail investors.
The rush for Bitcoin ETFs actually reflects a more significant development: Bitcoin is no longer perceived as a speculative asset; it is now recognized as a financial foundation upon which corporate strategies and investment portfolios will be constructed.
Obstacles Ahead: Regulatory and Market Dynamics
In the midst of the Bitcoin ETF hype, regulation is certainly a tough ask. The SEC has been quite careful and restrained in conceding Bitcoin ETF vis-a-vis many other reasons, including market manipulation, investor protection, etc.
However, Bitwise’s thorough filing and institutional investors’ acceptance of Bitcoin may give them an edge.
The more and more companies that are incorporating Bitcoin into their models, the more mainstream-the ETF will inevitably become, and thus, the more investment will come its way.
From the market perspective, this high volatility of Bitcoin acts as a double-edged sword. While it offers big growth, it also brings risks that will impact the ETF’s performance. Investors need to consider these carefully before jumping into Bitcoin funds.
Conclusion: Making Bitcoin Mainstream
The Bitwise Bitcoin Standard Corporations ETF is a step towards Bitcoin’s full financial integration. By targeting the large Bitcoin reserves of these companies, Bitwise is promoting the Bitcoin standard while giving investors a way to play this trend.
The Bitwise ETF would be one of the many public companies that add Bitcoin to their balance sheet, and it may be the key to broader adoption and acceptance. Again, the same regulatory and market dynamics will decide whether it is successful or not.
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FAQs
1. What is the Bitwise Bitcoin Standard Corporations ETF?
It is a proposed ETF designed to invest in publicly traded companies with a minimum of 1,000 BTC in their treasury.
2. Why are companies adding Bitcoin to their reserve?
Scarcity, performance and decentralization make Bitcoin a great hedge against inflation and economic uncertainty, making it more attractive as a reserve asset.
3. What are the eligibility criteria for Bitwise ETF?
Entities should have a minimum of 1,000 BTC, a market cap of $100 million or more, $1 million in daily liquidity and at least 10% public float.
4. How does this ETF compare to the other Bitcoin ETFs?
Unlike conventional Bitcoin ETFs; rather, it invests in corporations with large Bitcoin reserves providing diversified exposure to the Bitcoin economy.
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