Franklin Templeton Files Bitcoin DRIP ETFs as More Than Half of BTC Supply Sits at a Loss

Key Takeaways

• Franklin Templeton filed for two Bitcoin DRIP ETFs that would redirect stock dividends into Bitcoin exposure
• Each fund would start with a 5% Bitcoin allocation and allow exposure to rise to as much as 20%
• The filing comes as more than 10.5 million BTC, representing over half of Bitcoin’s circulating supply, is currently being held at a loss

Franklin Templeton’s latest filing suggests asset managers are still finding new ways to package Bitcoin exposure. This comes even as a growing share of the market sits in the red. The investment giant has proposed two new Bitcoin ETF products that would redirect stock dividends into the king coin. Amidst this, recent data shows more than half of Bitcoin’s circulating supply is currently being held at a loss. This is a level that has historically appeared during some of the market’s more difficult periods.

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Franklin Templeton Bitcoin ETF Filing Takes a Different Approach

Franklin Templeton filed paperwork with the US Securities and Exchange Commission (SEC) for two new funds. This includes the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF.

The proposed funds would invest primarily in US equities, but with a twist. Instead of automatically reinvesting dividends back into stocks, the cash would be used to build Bitcoin exposure. Under the initial structure, Bitcoin would make up 5% of each portfolio. But this allocation could rise over time, up to a maximum of 20%.

The proposed structure is taken from the concept of dividend reinvestment plans. This is commonly known as DRIPs, but applies it to Bitcoin accumulation instead of purchasing additional shares.

The filing arrives as competition in the crypto ETF market continues to intensify. Bloomberg Intelligence analyst James Seyffart previously noted that more than 100 crypto-related ETF filings were in the pipeline. Meanwhile, Bitwise has forecast a slew of launches throughout 2026.

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More Than Half of Bitcoin Supply Is Now Underwater

While new investment products continue to enter the market, on-chain data presents a different picture of current investor sentiment. According to data shared by analytics platform Glassnode, roughly 10.5 million BTC, representing more than 50% of Bitcoin’s circulating supply, is currently being held at a loss. Just a month ago, this figure stood closer to 30%.

Historically, similar readings were seen near major market lows in 2011, 2018, and 2022. Those periods were marked by high investor stress. But they were also followed by significant recoveries over the following year.

On one hand, a larger portion of Bitcoin holders are underwater. On the other hand, large asset managers continue expanding access to Bitcoin through new investment vehicles. At press time, the king coin was trading at $62,588.47 following a 2.02% drop over the past 24 hours.

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