Michael Saylor-fueled crypto complex gets bigger with debt ETF

By courting retail daredevils and opportunistic hedge funds alike, Michael Saylor has outwitted his Wall Street skeptics to build up a Bitcoin empire, helping create a whole new crypto-investment complex along the way.

Now that complex is set to grow again. On Friday, a convertible-bonds exchange-traded fund launches focused on companies like Saylor’s newly rebranded Strategy that have Bitcoin on their balance sheets.

The REX Bitcoin Corporate Treasury Convertible Bond ETF, which is making its debut under the ticker BMAX, holds converts, as they’re known in the industry, from firms including Strategy, which turbocharged the approach of selling equity-linked notes to fund its cryptocurrency purchases. Its wild success with the endeavor spurred a number of other companies to copycat the method. 

Convertible bonds start their life as low-interest notes but can turn into equities if share prices go high enough. Investors who buy and hold them can profit from their interest payouts or from any potential upside if the bonds are converted to stocks. 

These hybrid instruments are typically traded by institutional investors, including the long-only investors and hedge-fund players that employ an arbitrage strategy with them. The new ETF is, therefore, giving retail traders a chance to get exposure to convertibles issued by companies that are actively incorporating Bitcoin onto their balance sheets, all via an easily-tradeable ETF, according to Greg King, CEO of REX Financial. 

“Until now, these bonds have been difficult for individual investors to reach. BMAX removes those barriers,” King said in a statement. The fund also holds convertibles from MARA Holdings Inc., which rolled out its converts-for-Bitcoin-purchases after Strategy did. 

It’s the latest crypto ETF teeming with complexity for the mass market, testing speculative appetite amid the sweeping selloff hitting risky assets on trade-war fears.

The one-time software-focused company has, under the auspices of its chairman Saylor, been the largest issuer of convertible bonds in recent years, raising nearly $9 billion. The firm and the crypto peers that followed in its footsteps—companies such as MARA, Riot, and Bitdeer Technologies Group—have collectively raised billions of dollars over the past four months, accounting for an ever-larger share of the boarder U.S. convertibles market.

These crypto issuers, which tend to have big price swings, are gaining traction from convertible arbitrageurs who buy the bonds and short the stocks, essentially betting on the volatility.

$BMAX is the first ETF giving retail investors and investment advisors access to convertible bonds issued by companies integrating Bitcoin into their financial strategy. - @GregoryDKing , CEO of REX Financial

— Michael Saylor⚡️ (@saylor) March 14, 2025

But for convert investors, including the retail crowds who might buy BMAX as a bet on Saylor—who is a revered figure in crypto and X circles—these instruments still carry a credit risk, which means their holdings can be hit in the event the issuer struggles to make interest payments or repay the principal amount. 

There are at least seven convertible-bonds-focused ETFs on the market, according to data compiled by Bloomberg, most notably the $4 billion SPDR Bloomberg Convertible Securities ETF (CWB), which tracks an index and which has been trading since 2009. One other, an iShares product, is also passive. At least five of the seven funds have some Strategy exposure. 

Daisy-Chain Complex

BMAX also adds yet another notch into the robust daisy-chain-like financial-products complex that’s been built around Strategy in the years after it started to buy Bitcoin for its treasury—something other ETF issuers have looked to capitalize on. 

Earlier this week, Bitwise launched a fund that track an index of firms that hold Bitcoin as a corporate treasury asset—Strategy makes up nearly a quarter of it. Bitwise says that more than 70 public companies collectively hold over $60 Billion in Bitcoin on their balance sheets. The former MicroStrategy accounts for about $40 billion of the total. 

Meanwhile, a pair of exchange-traded funds that offer two times the daily return of the stock have been a favorite for day traders looking to bulk up their Strategy exposure: combined, the two—which sport the tickers MSTX and MSTU—have inflows of about $4 billion since their launches in August and September, respectively, though other products adjacent to this theme have also attracted cash. 

The popularity of the two Strategy funds, in particular, has led some market-observers to point to a leveraged-loop buying frenzy. It goes like this: Investor demand for the ETFs pushes up the price of Strategy, allowing it to raise more money and further prop up Bitcoin itself. 

“There is a growing ETF ecosystem being built around riding the coattails of Strategy and it bodes well for its staying power and relevancy,” said Bloomberg Intelligence’s Athanasios Psarofagis. But if Strategy sells off, as it has been in recent weeks, that interconnected system will suffer. For such instances, there are ETFs seeking to deliver twice the opposite return of the stock, he added.

This story was originally featured on Fortune.com