Bitcoin Adoption Among Institutions Gains Momentum Amid Rising ETF Filings

Institutional adoption of Bitcoin is accelerating, with several new filings for Bitcoin-focused exchange-traded funds (ETFs) surfacing recently, including one designed to invest in MicroStrategy’s convertible securities.

The dominant theme in the cryptocurrency market for 2024 has been institutional involvement. From the approval of spot Bitcoin (BTC) ETFs in the U.S. to a growing list of companies incorporating Bitcoin into their corporate treasuries, Bitcoin has become a central focus in mainstream financial discussions.

Bitcoin has seen a remarkable surge of nearly 130% this year, repeatedly setting new all-time highs and currently hovering near the $100,000 psychological milestone. Spot Bitcoin ETFs, approved in January, have attracted net inflows of $36 billion and now collectively hold over 1 million BTC.

Publicly traded companies are increasingly turning to Bitcoin for treasury reserves, a trend initiated by MicroStrategy (MSTR) in 2020. Recently, KULR Technology (KULR), a Houston-based energy storage solutions firm, announced the acquisition of 217.18 BTC valued at $21 million. The company plans to allocate up to 90% of its excess cash reserves to Bitcoin.

Bitwise Asset Management, already managing spot Bitcoin and Ether ETFs, has proposed a new ETF named the Bitwise Bitcoin Standard Corporations ETF. This fund will focus on companies holding a minimum of 1,000 BTC in their reserves. Eligibility criteria include a market capitalization of at least $100 million, an average daily trading liquidity of $1 million, and a public free float below 10%, according to the December 26 filing.

Strive Asset Management, co-founded by political figure Vivek Ramaswamy, has also entered the Bitcoin ETF arena with its Bitcoin Bond ETF. This actively managed fund will gain exposure to Bitcoin via derivative instruments, including MicroStrategy’s convertible bonds. These bonds have shown exceptional performance, with the 0% coupon bond maturing in 2027 currently trading at 150% above par and outperforming Bitcoin since issuance.

“At Strive, we’ve consistently warned about the long-term risks posed by fiat currency devaluation, inflation, and geopolitical uncertainty,” said Strive CEO Matt Cole in a statement to CoinDesk. “We believe strategic Bitcoin exposure remains one of the most effective hedges against these systemic risks.”

Cole emphasized that Strive’s Bitcoin Bond ETF aims to democratize access to Bitcoin-backed bonds. “These bonds, which are issued by corporations to acquire Bitcoin, present an attractive risk-reward profile but remain largely out of reach for most retail investors. Our ETF is designed to change that,” he added.

As institutional adoption continues to gather momentum, both direct Bitcoin holdings and innovative financial products are paving the way for broader participation and integration into global financial systems in 2024.