Public Keys: Strategy Stretches Bitcoin Raise and BlackRock’s Ethereum ETF Hits Warp Speed

Public Keys is a weekly roundup from Decrypt that tracks the key publicly traded crypto companies.

ETHA hits warp speed

BlackRock’s iShares Ethereum Trust, which trades under the ETHA ticker, just became the third-fastest ETF to reach $10 billion.

It reached the milestone in 251 days. And was beat by BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund—which did it in 34 days and 53 days, respectively.

There was much hand wringing and head scratching on Wall Street when the launch of spot Ethereum ETFs in July 2024 didn’t get the kind of reaction as Bitcoin ETFS did in January 2024.

We’re talking $1 billion in trading volume for ETH funds’ debut vs. $4.5 billion for Bitcoin. But investors don’t seem worried or confused now.

Looking ahead, there’s reason to believe the growth of crypto ETFs could accelerate even more. Analysts recently told Decrypt that Bitcoin and Ethereum ETF issuers are likely to get the nod from the SEC to offer in-kind redemption and creation of shares.

That would mean shares could be purchased with BTC or ETH—whichever happens to be the underlying asset—and that investors could receive BTC or ETH when they redeem their shares.

The feature is popular with investors, but regulators are concerned the process is complex and could pose security concerns in crypto-based funds.

Stretch, then lawyer up

Bitcoin glutton Strategy (formerly known as MicroStrategy) is back in the market raising cash to buy even more Bitcoin—this time with a new preferred stock offering that could add another $2.5 billion to its war chest.

At the time of writing, Strategy’s 607,770 Bitcoin is currently worth $70.6 billion with a 1,519.17% in unrealized profit after adding another $739.8 million to its holdings on Monday.

The company initially said it would raise $500 million with its new Stretch preferred stock offering, selling 5 million shares at $100 a pop. Then news got out (initially reported by Bloomberg) that the company would expand its offering to $2 billion.

When the SEC filing finally hit EDGAR on Friday, it became clear the company intends to raise closer to $2.5 billion with its new Stretch preferred stock offering.

Meanwhile, there’s a new class‑action lawsuit brewing over how Strategy amended terms for its Strike preferred stock offering. The company acknowledged in a July 21 filing that a plaintiff has filed a class action lawsuit alleging that holders of MSTR common stock ought to have been given a chance to vote on a July 7 amendment made to the Strike offering.

Speaking of class action lawsuits: The July 15 deadline has passed for a judge to choose a lead plaintiff in the other Strategy class action lawsuit over statements made by executives about the risks involved in its Bitcoin treasury.

Miner Issue

Issuing debt to buy Bitcoin hits different when it’s a Bitcoin miner.

At least that’s what can be deduced from the way MARA Holdings saw its share price tumble when execs announced an $850 million raise on Wednesday. The stock slipped again on Thursday, when an SEC filing revealed the company upsized its offering to $950 million.

The BTC the miner already holds in its treasury—second only to Strategy’s stash—is currently worth $5.8 billion. That puts its Bitcoin holdings nearly even with the company’s intraday market cap, which is $6 billion at the time of writing.

But the company isn’t just going to buy Bitcoin with the proceeds of its raise. It wrote in its SEC filing that it plans to use a portion of the new cash for “working capital, strategic acquisitions, expansion of existing assets, and repayment of additional debt and other outstanding obligations.”

All told, MARA shares look to be ending the week 12% lower than they started it, having gone from $19.98 per share to $17.15 at the time of writing.

But Compass Point analysts see the dip as a minor issue.

Early Friday, Compass Point analyst Ed Engel upgraded MARA from Sell to Neutral and nearly doubled his price target from $9.50 to $18. But he did caution in a note shared with Decrypt that the investors should expect to see some “pullback during seasonally weak August.”

The upgrade is largely driven by Bitcoin’s recent performance, he added—but that’s not all.

“While most miners are transitioning to HPC,” he wrote, referring to high-performance computing, “MARA seems committed to its HODL strategy that prioritizes ATM and convertible debt sales over selling BTC.”

He also noted that while the company has increasingly used its BTC holdings in yield-generating strategies—approximately 15%, by Engel’s count—”MARA has yet to disclose any ROI.”

Other Keys

• “Fraud”-backed loans: People familiar with JP Morgan’s business told Financial Times that the bank—whose CEO once called Bitcoin a “fraud”—is considering allowing clients to use Bitcoin and Ethereum as collateral for loans.
• XRP flip flop: Before altcoins got caught in their own froth, the XRP market capitalization climbed high enough to flip PepsiCo, BlackRock and Uber. It was even close to surpassing McDonald’s. But by Friday afternoon, XRP was in danger of slipping back below $3 and saw its market cap recede to $181 billion.