ETF companies are racing to launch the next “blockbuster” cryptocurrency fund

(Bloomberg) — Exchange-traded fund providers are finding more creative — and potentially riskier — ways to lure investors into the cryptocurrency craze.

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Paperwork covering a slew of new offerings has been filed with the SEC as 2024 winds down. Among the proposed products was a ProShares exchange-traded fund that would cap the S&P 500’s return in bitcoin. The planned funds by Strive Asset Management and REX Shares will provide exposure to convertible bonds issued by companies to buy Bitcoin. The ETF’s Volatility Shares envisions taking Solana’s money in reverse and leveraging it, along with a vehicle that would track the sixth-largest digital token using futures contracts.

“This is a continuing evolution of launches to integrate crypto strategies into ETFs. We’ll see a lot of these things in 2025,” said Athanasios Psaroufages of Bloomberg Intelligence. “It’s the most important thing — issuers like to strike when the topic is hot. We will see everything about cryptocurrencies.”

Overall, the deposits, if approved, will bring more than a dozen new cryptocurrency-focused funds into the space in 2025, just one year after the first-ever U.S. bitcoin ETFs were created.

2024 has been a banner year for all things cryptocurrency, with Bitcoin – the world’s largest digital asset – seeing a rise of more than 120% to surpass $100,000. This boost has occurred in part thanks 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 cryptocurrency space grow further. Enthusiasm over his election helped push annual inflows at the largest bitcoin ETF — a fund from BlackRock Inc. — to more than $37 billion for the year, the third-largest of all funds, data compiled by Bloomberg showed.

Michael Saylor, a Bitcoin fan and co-founder of MicroStrategy Inc., also took advantage of rising cryptocurrency prices by doubling down on his tactic of purchasing the largest token for the company’s reserves. MicroStrategy is using a mix of new stock and convertible bond sales to help finance the purchase — and other companies have similar plans.

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

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