The company Strive has submitted to the SEC the application to launch a new bond ETF for Bitcoin on the U.S. market.
This is an ETF different from the others, just as Strive is different from the other companies that have launched them.
Strive and the ETF on bond for Bitcoin
Strive Asset Management is a company created only three years ago.
It was founded by Vivek Ramaswamy, a prominent figure of the Republican Party.
Ramaswamy is an entrepreneur who in 2014 founded the pharmaceutical company Roivant Sciences. Not long ago, he was appointed by Trump to lead the DOGE, the Department Of Government Efficiency, alongside Elon Musk.
The stated goal of Strive is to use their clients’ assets with the sole purpose of maximizing their value, without using them for other purposes such as strategic or ideological investments.
The company has already issued a dozen ETFs, some already collateralized in bonds, but for now none in Bitcoin.
Strive requests the ETF on Bitcoin bonds from the SEC
The request submitted to the SEC states that the Strive Bitcoin Bond ETF will be collateralized in bonds issued to finance investments in Bitcoin.
By now, there are several companies that issue bonds in fiat currency with the specific purpose of raising funds to purchase BTC. The most famous is MicroStrategy, which has already raised several billion dollars in this way, but there are also others, and probably in the future, there will be more and more.
Those who invest in those bonds are effectively lending their fiat money to companies that invest in Bitcoin, receiving interest in return.
Strive and Bitcoin
Recently, the company has spoken publicly about Bitcoin to promote the launch of this ETF.
Strive's first of many planned Bitcoin solutions will democratize access to Bitcoin bonds, which are bonds issued by corporations to purchase Bitcoin. We believe these bonds provide attractive risk-return exposure to Bitcoin, yet they are not available to be purchased by most… pic.twitter.com/F7oiKDuDb7
— Strive (@StriveFunds) December 26, 2024
They have stated that this will be only the first of many of its upcoming solutions dedicated to Bitcoin, and that it will serve to democratize access to bonds for Bitcoin.
In fact, these bonds are generally not sold freely to everyone on the markets, but only to qualified investors. Instead, the ETF will be available to everyone, and thus anyone can gain exposure to these products.
Strive declares:
“We believe that these bonds provide an interesting risk-return exposure to Bitcoin”.
Furthermore, it adds that currently in the markets there would be long-term risks caused by the global fiat currency debt crisis, inflation, and geopolitical tensions. For this reason, they believe that there is no better long-term investment to protect against these risks than a weighted exposure to Bitcoin.
The Bitcoin ETF
Spot Bitcoin ETFs have been a huge success, also because they are fully and directly collateralized in BTC.
However, this, on one hand, can allow for excellent profits during the bull runs, but exposes to greater risks during the bear markets.
The bonds to purchase Bitcoin significantly reduce these risks, even if they cannot guarantee performances similar to those of BTC during the bullrun. Additionally, they add another element of risk, namely that of entrusting one’s money to a private and centralized company that can always fail.
So although Bitcoin Bond ETFs are not directly collateralized in BTC, they are still an indirect form of exposure to Bitcoin, even if they do not allow for large gains during bull runs and add a second risk factor related to the custodian of the BTC that are bought thanks to the issuance of the bonds. However, they greatly reduce risks during bear markets, so they can make sense within a diversification strategy.
“`html MicroStrategy “`
The reference company in the Bitcoin Bond market is definitely MicroStrategy.
During 2024, the price of its shares on the stock market rose from less than $70 to a new all-time high well over $500, but at that point, it recorded a strong correction.
Currently, it is just below $340, but according to some analysts, it could also return well below $300.
It should be noted, however, that even though the one in November was evidently a mini-bubble that inevitably burst, the current price is still much higher than the highs of 2021, when it barely managed to surpass $130. Furthermore, it is 400% higher than a year ago, and since it had not exceeded $180 until October, even if it were hypothetically to fall below $200, it would only be the bursting of the mini-bubble triggered by Donald Trump’s electoral victory.
