ETF Companies Are Racing to Launch the Next ‘Hot’ Crypto Fund

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(Bloomberg) — Purveyors of exchange-traded funds are finding ever more creative — and potentially riskier — ways to lure investors into the crypto craze.

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Paperwork covering a plethora of newfangled offerings was filed with the US Securities and Exchange Commission as 2024 was ending. Among the proposed products was an ETF from ProShares that would denominate the S&P 500’s return in Bitcoin. Funds planned by Strive Asset Management and REX Shares would offer exposure to convertible bonds issued by companies to buy Bitcoin. And ETF company Volatility Shares envisions getting inverse and leveraged Solana funds off the ground, alongside a vehicle that would track the sixth-largest digital token using futures contracts.

“This is the continued evolution of launches to incorporate crypto strategies into ETFs. We’ll see a lot of these in 2025,” said Bloomberg Intelligence’s Athanasios Psarofagis. “It’s the hot thing — issuers love to strike when the theme is hot. We’ll see crypto everything.”

All in all, the filings, if approved, would bring about more than a dozen new crypto-centric funds to the space in 2025, just a year after the inception of the first-ever US Bitcoin ETFs.

2024 was a banner year for all things crypto, which saw Bitcoin — the world’s largest digital asset — surge more than 120% to cross above $100,000. That boost happened thanks in part to incoming president Donald Trump’s embrace of the industry, with many market-watchers betting that a looser regulatory stance by his administration could help the crypto space grow further. The enthusiasm over his election helped push annual inflows for the biggest Bitcoin ETF — one by BlackRock — above $37 billion for the year, the third-most of all funds, data compiled by Bloomberg show.

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Bitcoin fan and MicroStrategy Inc. co-founder Michael Saylor also took advantage of surging crypto prices by doubling down on his tactic of purchasing the largest token for the company’s reserves. MicroStrategy has been using a mix of new equity and sales of convertible bonds to help finance the buying — and other companies have similar plans.

According to a filing, the REX ETF intends to invest a majority of its assets in convertible bonds issued by firms that hold Bitcoin. Meanwhile, Strive is proposing to launch a fund that invests in derivatives such as swaps and options to get exposure to convertible securities issued by MicroStrategy or other companies with similar investment strategies, according to paperwork filed last week.

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