These hybrid Bitcoin ETFs look to blend Nasdaq, gold, and MicroStrategy bonds

The success of spot price Bitcoin exchange-traded funds in 2024 has helped spawn some new creative spinoffs.

These proposed hybrid ETFs aim to further integrate Bitcoin into traditional finance to the next level by combining it with established assets like Nasdaq stocks, gold, and corporate bonds tied to Bitcoin-focused companies like MicroStrategy.

ProShares proposed three unique ETFs: the SP 500 Bitcoin ETF, the Nasdaq-100 Bitcoin ETF, and the Gold Bitcoin ETF.

If approved, these funds would offer Bitcoin-denominated returns on traditional equity market benchmarks or gold.

“Basically it’s a long position in underlying stocks or gold then a short USD/long BTC position using BTC futures.” ETF Store president Nate Geraci explained.

Geraci dubbed them “BTC hedged ETFs,” and commented, “Bitcoin is starting to eat traditional finance.”

Meanwhile, the proposed REX Bitcoin Corporate Treasury Convertible Bond ETF would invest in convertible bonds issued by companies like MicroStrategy.

Convertible bonds are a type of loan to a company that pays interest but can be swapped for shares of the company’s stock if its value rises.

This debt strategy has been quite successful for MicroStrategy under chairman Michael Saylor.

“MicroStrategy uses a combination of low-cost debt and equity dilution to increase the amount of Bitcoin it holds for each share of its stock,” explained Benchmark analyst Mark Palmer.

Since it began using this tactic in 2020, MicroStrategy shares have increased by around 2,000 percent.

Similarly, MARA Holdings raised $1 billion in convertible senior notes in 2024 to fund Bitcoin purchases.

MARA currently holds over 40,000 Bitcoins, making it the second-largest corporate Bitcoin holder after MicroStrategy.

Bitwise is also targeting companies stacking Bitcoin as a reserve asset.

The asset manager recently filed for the Bitcoin Standard Corporations ETF, which would track publicly listed companies holding Bitcoin, such as MicroStrategy, Block, and Tesla.

Kyle Baird is DL News’ Weekend Editor. Got a tip? Email at [email protected].