With a focus on public companies holding Bitcoin on their balance sheets, Valkyrie’s new ETF offers indirect exposure to the industry’s leading cryptocurrency.
December 17, 2021
By CryptoEvents
Valkyrie Balance Sheet Opportunities ETF is now trading on the Nasdaq, opening up an alternative way of getting exposure to Bitcoin.
Filed with the Securities and Exchange Commission (SEC) in March and launched on December 15, Valkyrie’s new exchange-traded fund (ETF) doesn’t directly invest in Bitcoin, instead targeting public companies that directly or indirectly invest in, transact in, or hold Bitcoin on their balance sheets.
In an interview with Bloomberg Quicktake, Leah Wald, CEO of Valkyrie, said that the Valkyrie Balance Sheet Opportunities ETF was launched following “extensive discussions” with Individual Retirement Accounts (IRA) managers and financial advisors.
Valkyrie Investments CEO Leah Wald talks about their new Balance Sheet Opportunities ETF. She's on Quicktake. pic.twitter.com/Imvum3OoNS
— Bloomberg Crypto (@crypto) December 17, 2021
An ETF is an investment vehicle focusing on stocks, bonds, or other commodities traded on an exchange. Many American investors have also long asked for an ETF backed by physical Bitcoin, however, the SEC is yet to approve any such product.
With the new ETF launched, Valkyrie, which also has a pending Bitcoin ETF application, is hoping to at least partially fill that void.
Speaking to TD Ameritrade Network, Valkyrie Funds co-founder Steven McClurg said that Valkyrie came up with this concept about a year ago when MicroStrategy began adding Bitcoin to its balance sheet.
“Our assumption was that more and more companies would [purchase Bitcoin] as a way of cash management, and we’ve seen quite some interest so far,” said McClurg.
Valkyrie limits exposure to Bitcoin miners
Coming with a management fee of 0.75%, Valkyrie Balance Sheet Opportunities ETF is an actively-managed ETF featuring a total of 15 companies in the basket.
In addition to MicroStrategy, other names include Tesla, Block (formerly known as Square), Coinbase, Overstock, Mastercard, PayPal, Robinhood, Blackrock, and BTCS.
According to McClurg, the companies in the ETF’s basket help to mitigate risks associated with direct exposure to Bitcoin through the very nature of businesses they run, be it Mastercard transactions, MicroStrategy’s software solutions, or Tesla’s automotive and data services.
“This also helps to track the price of Bitcoin because the enterprise value of a company will fluctuate based on the price of Bitcoin,” added McClurg.
As for Bitcoin mining companies, Valkyrie decided to keep a very small percentage of them in the portfolio, because they get exposure to Bitcoin “in a very different way.”