The new Bitcoin token is pictured on the $100 bill.
Sopa Images | Light Rocket | Getty Images
Bitwise’s new exchange-traded fund, which began trading on Tuesday, will give retail investors and financial advisors access to a wide range of cryptocurrencies at once, in contrast to previous ETFs that mostly tracked only one or two cryptocurrencies.
Bitwise 10 Crypto Index ETF (BITW) holds 10 digital assets: Bitcoin, Ether, XRP, Solana, Chainlink, Litecoin, Cardano, Avalanche, Sui, and Polkadot. The conversion makes BITW the first ETF from a major crypto asset manager, including Avalanche, Sui, and Polkadot, Bitwise CEO and co-founder Hunter Horsley told CNBC.
“This really meaningfully expands the audience that has access to these different assets. [and] Especially if it’s an asset that doesn’t have a spot ETF, of course,” Horsley said Monday.
The fund provides crypto exposure to financial advisors as well as other small investors using funds from IRAs and retirement accounts who “have no choice but to use ETFs,” the CEO said.
The ETF will be converted from an index fund that held the same coin and will begin trading with $1.5 billion in assets. In addition to broader trading and holding permissions, ETFs also offer other advantages over funds, such as trading flexibility, increased tax efficiency, and reduced fees, which may be more attractive to some investors.
The move follows the Securities and Exchange Commission’s approval of a slew of spot Bitcoin ETFs in the US in January 2024. Since then, asset managers have been fighting for approval to launch ETFs that track a wider range of digital assets, from altcoins like Sui and Aptos to meme coins like Official Trump and Dogecoin.
The ETF was created amid a recent series of sell-offs in the crypto market, with Bitcoin trading as low as $85,000 earlier this month. Small-cap coins with fewer institutional investors were hit even harder by the recent selloff, highlighting the risk that this ETF could lead to bigger losses for smaller investors.
On the other hand, as the crypto market matures and coins are traded on their own merits, such ETFs offer the potential for diversification, similar to what broad index funds such as the S&P 500 do with stocks.
“Bitcoin ETFs have gained traction since their launch, but now is a great time for many investors who want a more comprehensive solution to allocate to digital assets, rather than selecting specific assets and sizing different exposures,” Horsley said.
Admittedly, the exposure to small-cap coins within the fund is limited. BITW will allocate 90% of its holdings to assets held in existing single-coin exchange traded products (Bitcoin, Ether, Solana, XRP). The total weight of all other tokens in the fund is limited to 10%.
This fund rebalances monthly, which is more frequent than most ETFs, which rebalance quarterly or semi-annually.
Bitwise manages over $15 billion in customer assets and has a suite of over 40 digital asset investment products.
BITW, which is technically an exchange-traded product, rose 1.5% on Tuesday on its new home, the NYSE Arca exchange.
