Author: Vildana Hajric, Bloomberg News; Translated by: Wuzhu, Golden Finance
Providers of exchange-traded funds are finding increasingly creative (and potentially riskier) ways to lure investors into the cryptocurrency craze.
As 2024 draws to a close, the Securities and Exchange Commission has received a slew of filings for novel products. Proposed products include an ETF from ProShares that would denominate the returns of the S&P 500 in bitcoin. Planned funds from Strive Asset Management and REX Shares would offer convertible bonds issued by the companies for buying bitcoin. ETF company Volatility Shares envisions launching inverse and leveraged Solana funds, while also launching a tool that uses futures contracts to track the sixth-largest digital token.
"This is a continued evolution of integrating crypto strategies into ETFs. We will see many such products in 2025," said Bloomberg's Athanasios Psarofagis. "This is a hot topic—issuers like to strike when themes are hot. We will see everything related to cryptocurrency."
In summary, if these applications are approved, there will be a dozen new cryptocurrency-focused funds entering the space by 2025, one year after the establishment of the first Bitcoin ETF in the U.S.
2024 is a glorious year for the cryptocurrency space, with Bitcoin—the world's largest digital asset—surging over 120% to break through $100,000. This growth is partly attributed to the support of incoming President Donald Trump for the industry, with many market observers betting that a more lenient regulatory stance from the Trump administration could help further the development of the cryptocurrency space. Data compiled by Bloomberg shows that enthusiasm for his election drove the largest Bitcoin ETF (BlackRock's ETF) to over $37 billion in annual inflows, ranking third among all funds.
Bitcoin enthusiast and MicroStrategy Inc. co-founder Michael Saylor also took the opportunity of the cryptocurrency price surge to double down and purchase the largest tokens in the company's reserves. MicroStrategy has been using a combination of new equity and convertible bond sales to help finance the purchases—other companies have similar plans.
According to a filing, REX ETF intends to invest most of its assets in convertible bonds issued by companies that hold Bitcoin. Meanwhile, according to a filing submitted last week, Strive is proposing to launch a fund that invests in derivatives such as swaps and options to gain exposure to convertible securities issued by MicroStrategy or other companies with similar investment strategies.
"It's rare for a new asset class to emerge for the investing public, and cryptocurrency is just that now—when there's demand, Wall Street is always good at creating supply," said Todd Sohn, an ETF strategist at Strategas. "And so this is the evolution of the crypto ETF space: based on futures, spot, themes, and now convertible products, it's highly specific for MicroStrategy and others participating in a similar capacity."
