Bitwise, a leading digital asset management company, has filed a new registration statement with the US Securities and Exchange Commission (SEC), dated December 26, 2024, seeking approval of the “Bitwise Bitcoin Standard ETF.” The coverage describes a fund that aims to invest in publicly traded companies that hold significant amounts of BTC on their balance sheets or derive a significant portion of their income from BTC-related activities.
“The Adviser believes that investing in shares of companies that have business or capital assets related to BTC can provide exposure to the performance of Bitcoin while mitigating challenges such as custody, regulatory hurdles, and liquidity concerns,” the document said.
Investing in the biggest Bitcoin players
Central to this proposal is a strong eligibility framework. Companies holding at least 1,000 BTC in reserves are eligible for inclusion, and must maintain a market capitalization of no less than $100 million. Daily trading capital must exceed $1 million, and the proportion of the company’s stock held privately must be less than 10%.
These methods are designed to ensure that the ETF’s exposure is concentrated in established companies that are truly committed to Bitcoin in both strategy and treasury. Bitwise emphasizes that this approach helps protect investors from the risks of liquidity and potential management issues.
One of the most prominent factors in the filing is Bitwise’s decision to deviate from traditional market-cap weighting. Instead, the Bitcoin Standard ETF uses a valuation method based on each firm’s market value of BTC shares, subject to an average of 25% per firm.
This tool effectively emphasizes the size of a company’s BTC treasury instead of its size or total revenue: “The Fund’s weighting process will focus on the estimated market value of each company’s Bitcoin reserves, including individuals to avoid over-concentration.”
For example, MicroStrategy, a publicly traded business intelligence firm, currently boasts an estimated 444,262 BTC in its reserves. Despite the company’s market capitalization being much smaller than that of Tesla, MicroStrategy’s large Bitcoin treasury will give it a weight that is more than Tesla, which holds about 11,509 BTC.
The filing also reveals that the fund will invest at least 80% of its net assets in equity securities of what Bitwise calls Bitcoin Standard companies, while maintaining the flexibility to hold short-term instruments like cash for liquidity purposes. Under normal market conditions, the Fund aims to invest at least 80% of its net assets in securities of companies that hold significant BTC on their balance sheets or generate a significant portion of their income from Bitcoin-related activities,” he says.
The public response was overwhelmingly positive. Nate Geraci, president of the ETF Institute wrote about X: “The btc treasury operations virus is spreading.” James McKay, founder of McKay Research, added: “You know ‘something’ is important when exposure to something that carries something gets its own crust.”
The same day Bitwise posted its filing, Vivek Ramaswamy’s Strive Asset Management also made waves with its Bitcoin-focused ETF proposal. Called the Strive Bitcoin Bond ETF, it will target convertible bonds from companies that hold significant amounts of BTC, such as MicroStrategy.
At press time, BTC traded at $94,857.
The featured image was created with DALL.E, a chart from TradingView.com