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Highlights
- ProShares Bitcoin ETF will offer investors a hedge against U.S. dollar fluctuations through a short USD/long Bitcoin strategy.
- The proposed ETFs use Bitcoin futures contracts to hedge U.S. dollar exposure tied to traditional financial markets.
- Rex filed a Bitcoin Corporate Treasury Convertible Bond ETF targeting firms holding BTC.
Popular ETF issuer ProShares filed for a series of innovative exchange-traded funds that will offer exposure to traditional financial assets while incorporating a Bitcoin hedge. With an additional layer of Bitcoin futures integration, the proposed ETFs would track the performance of the S&P 500, Nasdaq-100, and gold.
How Will the ProShares Bitcoin-Hedged ETFs Function?
As per the SEC filing, these Bitcoin-hedged ETFs will combine long positions in underlying stocks or gold with a short position on the U.S. dollar and a long position in Bitcoin via futures contracts. With this strategy, ProShares seeks to leverage Bitcoin’s potential as an alternative asset while offering exposure to traditional financial markets. Note that the fund doesn’t make any direct investment into Bitcoin.
The SEC filing notes that the short U.S. dollar/long Bitcoin strategy is executed by investing in future contracts for Bitcoin. Thus, it provides a currency hedge for the U.S. dollar exposure tied to the S&P 500 stock position. Reset on a monthly basis, this hedge aims to reduce the effects of fluctuations in the U.S. dollar’s value relative to Bitcoin.
This move marks another step in Bitcoin’s growing influence over traditional finance (TradFi). Over the years, institutions have been exploring innovative ways to integrate Bitcoin and digital assets into conventional investment methods. Furthermore, industry leaders like Robert Kiyosaki are turning bullish expecting it to hit $350K by the end of 2025.
Demand for BTC Bond ETF on the Rise
The latest filing from ProShares reflects the growing market confidence towards the flagship crypto. Notably, following the filing of Bitwise Bitcoin Standard Company ETF, REX has proposed a new exchange-traded fund (ETF) aimed at investing in convertible bonds issued by companies that hold Bitcoin in their corporate treasuries. Dubbed the “Bitcoin Corporate Treasury Convertible Bond ETF,” it seeks to provide investors with exposure to firms like MicroStrategy, Marathon Digital, Metaplanet, and others that leverage Bitcoin as a strategic asset.
The fund commits to investing at least 80% of its net assets, including any borrowings, in these specialized convertible bonds, noted the filing. The structure offers investors a unique way to gain exposure to companies involved in the bitcoin space while focusing on their convertible bond offerings rather than direct equity or cryptocurrency investments.
Inflows into spot BTC ETFs have skyrocketed after Donald Trump’s election victory last month with hopes of rising Bitcoin adoption in the market. The total inflows since inception have skyrocketed to more than $35.6 billion with BlackRock’s IBIT alone seeing over $37 billion in inflows.
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