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BTC Brazil-based Bitcoin treasury company OranjeBTC announced that it will launch a new exchange-traded fund (ETF) in early September. The fund, called DIGY11, provides Brazilian traders with the opportunity to invest in perpetual preferred shares of Bitcoin companies through an index developed in partnership with MarketVector. The fund shares will be traded on the Brazilian Stock Exchange (B3) and invested in preferred shares issued by Bitcoin Ecosystem.
OranjeBTC includes STRC and SATA in DIGY11
Perpetual preferred shares are preferred securities with no fixed maturity date and are usually designed to distribute earnings to investors on a regular basis. The company said that to qualify for inclusion in the DIGY11 fund, its issuer must hold at least 50% of its total assets in Bitcoin and hold a minimum of 4000 BTC. Based on these criteria, OranjeBTC has selected two preferred shares to include in the initial index component: STRC issued by Strategy, and SATA issued by Strive.
What is STRC?
Strategy (Nasdaq: MSTR), formerly known as MicroStrategy, has become known as the world's largest Bitcoin treasury company. Despite the recent sale, the company, led by Michael Saylor, still holds 840447 BTC on its balance sheet. Stretch (STRC) is a perpetual preferred stock issued by Strategy with an annual dividend yield of 12%, paid in cash every half month. Strategy uses STRC as a means to raise funds. STRC's dividend yield is adjusted monthly to encourage trading around a $100 face value and help eliminate price fluctuations. If investors are willing to buy STRC for about $100, the company can issue new preferred shares at about $100 per share and use the proceeds to buy Bitcoin. But if the price of STRC fell to $90 instead of $100, Strategy would raise 10% less money per share. To make matters worse, investors will demand higher yields to compensate for falling prices, increasing Strategy's funding costs. STRC shares are currently trading at $95.73, putting Strategy's funding facility under pressure. DIGY11 will allocate 95% of its portfolio to STRC and the rest to SATA.
What is SATA?
Strive, Inc. (Nasdaq: ASST) was founded in 2022 by Vivek Ramaswamy and Anson Frericks and is one of several major Bitcoin treasury companies. It holds 20167 BTC on its balance sheet. SATA is a floating rate Series A perpetual preferred stock issued by Strive that pays dividends daily at an annualized rate of 13%. Similar to Strategy, Strive also uses SATA to raise funds for purposes such as purchasing Bitcoin. Similar to STRC, SATA also has a mandatory face value of $100. In the past, it has often fallen below the prescribed price and is currently trading at $99.44.
DIGY11 is designed to allocate monthly income
OranjeBTC clarified that the DIGY11 fund does not buy Bitcoin and does not seek to replicate Bitcoin's performance. Instead, it invests in preferred shares issued by Bitcoin companies. The fund aims to allocate monthly income generated by securities in its portfolio. OranjeBTC stated that DIGY11 carries major risks, including price changes in preferred securities, issuers 'reduction or suspension of shares, credit risk, liquidity risk, residual currency risk, Bitcoin volatility and regulatory developments.
