These Hybrid Bitcoin ETFs Look to Blend Nasdaq, Gold, and MicroStrategy Bonds

The success of spot price Bitcoin exchange-traded funds (ETFs) in 2024 has inspired new and innovative spinoffs. These proposed hybrid ETFs aim to integrate Bitcoin more deeply into traditional finance by combining it with established assets such as Nasdaq stocks, gold, and corporate bonds linked to Bitcoin-focused companies like MicroStrategy.

ProShares has proposed three unique ETFs: the S&P 500 Bitcoin ETF, the Nasdaq-100 Bitcoin ETF, and the Gold Bitcoin ETF. If approved, these funds would provide Bitcoin-denominated returns based on traditional equity market benchmarks or gold.

“Basically, it’s a long position in underlying stocks or gold combined with a short USD/long BTC position using Bitcoin futures,” explained Nate Geraci, president of ETF Store. Geraci labeled them “BTC hedged ETFs” and remarked, “Bitcoin is starting to eat traditional finance.”

On another front, 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 converted into the company’s stock if its value rises.

MicroStrategy’s chairman, Michael Saylor, has effectively utilized this debt strategy. “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 Mark Palmer, a Benchmark analyst. Since adopting this approach in 2020, MicroStrategy shares have surged by approximately 2,000%.

Similarly, MARA Holdings issued $1 billion in convertible senior notes in 2024 to finance Bitcoin acquisitions. The company now holds over 40,000 Bitcoins, ranking as the second-largest corporate Bitcoin holder after MicroStrategy.

Bitwise, another key player, recently filed for the Bitcoin Standard Corporations ETF. This fund would track publicly traded companies holding Bitcoin, including MicroStrategy, Block, and Tesla.

BitGalactic’s Take
The emergence of these hybrid Bitcoin ETFs is a testament to Bitcoin’s growing influence in the financial world. By merging traditional assets with Bitcoin strategies, these funds not only bridge two financial ecosystems but also provide a gateway for investors hesitant to embrace pure Bitcoin exposure. This signals a significant evolution in Bitcoin’s role—from being merely a speculative asset to becoming a foundational element in diversified portfolios.

BitGalactic believes these products mark a critical step in normalizing Bitcoin within traditional finance, ultimately driving adoption and bolstering the digital asset’s legitimacy. The crypto space is no longer just an alternative—it’s becoming integral to mainstream financial frameworks.