Bitwise Files Bitcoin Standard ETF Featuring Top BTC-Holding Companies

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As a seasoned researcher with years of experience in the digital asset space, I find the recent developments in the Bitcoin ETF landscape particularly intriguing. The Bitwise Bitcoin Standard ETF proposal, which seeks to invest in publicly traded companies with substantial Bitcoin holdings or BTC-related activities, presents an innovative approach to accessing the Bitcoin market.

In simpler terms, Bitwise, a well-known digital asset management company, submitted a new application on December 26, 2024, to the United States Securities and Exchange Commission (SEC), for the approval of “Bitwise Bitcoin Standard ETF”. This application outlines a fund designed to invest in corporations that have large quantities of Bitcoin on their financial records or generate a substantial portion of their income from Bitcoin-related operations.

According to the text, the Advisor suggests that by purchasing stocks from companies heavily involved in Bitcoin (BTC) operations or holdings, one could gain access to Bitcoin’s market performance without having to deal directly with issues like storage, legal restrictions, and market fluidity.

Investing In Bitcoin’s Big Players

At the heart of this plan lies a stringent set of eligibility criteria. To be considered, firms should have a minimum of 1,000 Bitcoins stored in their reserves. Additionally, these companies must possess a market capitalization of no less than $100 million. Moreover, daily trading liquidity should surpass the $1 million mark, and the privately held company stock should not account for more than 10%.

This system of requirements has been set up to guarantee that the ETF primarily invests in well-established companies that are deeply involved with Bitcoin, demonstrating a strategic and financial dedication to it. Bitwise emphasizes that adopting this method helps shield investors from potential liquidity problems and governance complications.

One notable aspect of this submission is Bitwise’s choice to break away from the conventional method of market-cap weighting for their Bitcoin Standard ETF. Instead, they use a method that weights each company based on the market value of their Bitcoin holdings, with a maximum of 25% per individual firm.

The method used here mainly focuses on the worth of a company’s Bitcoin reserves as compared to its total size or earnings. In simpler terms, the selection process for this fund will prioritize the estimated value of each company’s Bitcoin holdings, ensuring that no single company becomes overly dominant.

Here’s one way to rephrase the given text:

The document shows that this fund plans to allocate at least 80% of its total resources towards purchasing shares of companies classified as “Bitcoin Standard” by Bitwise, with the option to temporarily hold assets like cash for liquidity needs. In regular market scenarios, the goal is to invest at least 80% of the net assets in the stocks of companies that have substantial Bitcoin holdings on their balance sheets or earn a significant portion of their income from Bitcoin-related operations, as stated in the filing.

The feedback from the community was predominantly favorable. Nate Geraci, head of The ETF Institute, expressed through X: “The Bitcoin treasury operations virus is gaining momentum.” James McKay, founder of McKay Research, further stated: “You can tell something is significant when even an investment in the thing that possesses the thing itself is being packaged separately.

On the very same day that Bitwise submitted its ETF filing, Vivek Ramaswamy’s Strive Asset Management likewise generated attention with a Bitcoin-oriented ETF proposal of their own. Known as the Strive Bitcoin Bond ETF, it aims to invest in convertible bonds issued by companies holding substantial quantities of Bitcoin, such as MicroStrategy.

At press time, BTC traded at $94,857.

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2024-12-27 11:27