In a lighthearted twist, the Bitwise Bitcoin ETF (BITB) received a unique contribution of 6969 satoshis (sats), the smallest unit of Bitcoin, propelling it to become the first and currently only over-collateralized Bitcoin ETF in the market. This unexpected event garnered attention within the cryptocurrency community, highlighting transparency and a playful spirit.
A Unique Donation
An ETF tracks the underlying asset, in this case Bitcoin. Collateralised ETFs hold enough Bitcoin to match the total value of the outstanding shares. Over-collateralization occurs when the value of the Bitcoin held exceeds the value of the ETF shares.
Prior to this surprise donation, BITB stood at 100% collateralised, holding sufficient Bitcoin to exactly match the value of its outstanding shares. The 6969 sats contribution, though a tiny amount, pushed the total Bitcoin holdings past the exact share value, achieving over-collateralization.
A Public Address
This was made possible bacause Bitwise made its Bitcoin address public, the very first Bitcoin ETF issuer to do so.
Announcement: Today the Bitwise Bitcoin ETF (BITB) becomes the first U.S. bitcoin ETF to publish the bitcoin addresses of its holdings.
Now anyone can verify BITB’s holdings and flows directly on the blockchain.
Onchain transparency is core to Bitcoin’s ethos. We’re proud to… pic.twitter.com/1JTUh3zvDE
— Bitwise (@BitwiseInvest) January 24, 2024
Significance and Implications
While the financial impact of 6969 sats is negligible, the event underscores several noteworthy points. Firstly, publishing Bitcoin addresses allows for real-time verification of holdings and over-collateralization, strengthening trust and investor confidence. In a response to a tweet from BitwiseInvest, Bitwise stated:
“Publishing on-chain addresses is a first step toward increasing public transparency. As infrastructure evolves, we hope to do more, such as working with firms like @hosekiapp to provide real-time cryptographic attestations.”
The playful nature of the donation reflects the lighthearted and engaged spirit of the cryptocurrency community. While minor, over-collateralization could potentially signal increased trust in the ETF, attracting further investment and impacting its market share.