Trump Media wants to issue an ETF on blue-chip crypto

Yesterday, Reuters reported that Trump Media has requested SEC approval for a blue-chip crypto ETF.

It would be an uncollateralized ETF in a single cryptocurrency, but with the main cryptos, including in particular Bitcoin, Ether, and Solana.

The Crypto Blue Chip ETF of Trump Media

The name given to the fund is Truth Social Crypto Blue Chip ETF, since Truth Social is the social network of Trump Media. 

In addition to the three cryptos already mentioned, XRP and CRO (Cronos) would also be part of the basket of this ETF. 

The collateral would actually be composed of 70% BTC, while all the other cryptos together would barely reach 30%. Specifically, 15% will consist of ETH, 8% of SOL, 5% of CRO, and 2% of XRP. 

It will be traded on the platform for ETF Arca of the New York Stock Exchange.

It should be remembered that this is the third request submitted to the SEC by Trump Media regarding the launch of crypto ETFs, each for funds with a different composition of the collateral. 

Trump Media also plans to launch at least one more crypto ETF, collateralized in BTC and ETH.

Last month the company submitted two applications to the SEC, one for an ETF that will have 75% of the collateral in BTC, and the remaining 25% in ETH, and another that has only Bitcoin.

The launch of these ETFs should occur by the end of the year.

Trump Media

Trump Media & Technology Group (DJT) is the Trump family’s company that controls, for example, the social network Truth. 

It was founded by Donald Trump, and it has been listed on Nasdaq since 2021. 

In May, the company announced its intention to raise 2.5 billion dollars to purchase Bitcoin.

The stock market performance of the DJT share price is not particularly positive for now.

The debut occurred at $16, but already after just a few weeks, it recorded the all-time high at $175.

That mini-bubble burst almost immediately, so much so that less than a month later the price had already fallen back below $40. After a relatively short rebound in the early months of 2022, the decline resumed, with the price in 2023 eventually falling even below $13. 

The bear-market of DJT ended only in January of last year, when a new mini-bubble inflated on the price of Trump Media shares, culminating in March 2024 at almost $80. 

In September, it ended up dropping even below $12, but with Trump’s electoral victory, a third mini-bubble inflated, which this time, however, did not even manage to surpass $55. 

Currently, the price is about $19, which is in line with the initial price of 2021. 

Bitcoin ETFs

The first crypto ETFs collateralized with direct custody of the tokens landed on the US exchanges in January of last year. 

It was obviously about spot ETFs collateralized only in BTC, and they immediately achieved a sensational success. 

Consider that of the 1.5 million BTC held worldwide by exchange-traded funds, almost half (700,000) are held by BlackRock’s IBIT alone, with another 200,000 held by Fidelity’s FBTC. Both of these ETFs were launched on the market only a year and a half ago. 

It should be noted that 1.5 million Bitcoin currently have a market value of over 172 billion dollars, and they constitute just under 10% of all BTC in circulation worldwide, given that a few million BTC theoretically still existing must be considered lost forever due to the loss of the private keys necessary to use them. 

It is therefore an important market, both in general for the crypto sector and in particular for the managers of those funds themselves. 

It is not surprising, therefore, that Trump Media also wants to join the ranks of financial institutions that are profiting thanks to these bull and bear derivative products. 

The other crypto ETFs

In July of last year, ETF su ETH spot also landed on the American stock exchanges.

To tell the truth, they haven’t had even remotely comparable success to that of spot BTC ETFs, so it’s not surprising that Trump Media is still focusing mainly on Bitcoin, giving altcoins a decidedly minor role. 

It should also be added that while the spot BTC ETFs on US exchanges ended up having a positive and significant impact on the price of Bitcoin itself, this did not happen with the launch of Ethereum ETFs, nor with that of funds on other crypto. 

Therefore, only the crypto ETFs that hold Bitcoin seem to be sufficiently attractive for traditional exchanges to aim to attract many investors, and the choice of Trump Media indeed goes precisely in this direction.