Bitwise Asset Management is taking a significant step to convert its $1.3 billion Bitwise 10 Crypto Index Fund (BITW) into an Exchange-Traded Product (ETP). NYSE Arca has filed a Form 19b-4 to facilitate the uplisting, marking another milestone in the evolution of crypto investment vehicles.
According to Bitwise CEO Hunter Horsley, ETPs offer a more efficient and convenient approach for investors to gain exposure to cryptocurrencies. This move aligns with industry trends, as firms like Grayscale have recently pursued similar conversions.
Diverse Crypto Portfolio
Launched in 2017 as the first-ever crypto index fund, BITW offers a diversified portfolio of the ten largest digital assets. Bitcoin dominates the fund at 74.8%, followed by Ethereum at 16.2%, and Solana at 4.4%. Other allocations include XRP, Cardano, and Avalanche.
Currently trading on the OTCQX Best Market, the fund is quoted at $52, despite a net asset value (NAV) of $62. Converting to an ETP aims to address such premium/discount discrepancies through an arbitrage mechanism.
Enhanced Efficiency and Regulation
Bitwise highlights the advantages of an ETP structure, including streamlined subscriptions, redemptions at NAV, and improved regulatory protections. This could make the fund more appealing to a broader range of investors, ensuring tighter alignment with its underlying crypto index.
BITW already boasts strong performance, delivering a 50.2% return in the past month and 108.9% year-to-date in secondary market trading. These figures surpass the 30% and 81.8% returns of its benchmark crypto index.
Broader Implications
If successful, the conversion would solidify Bitwise’s role as a leader in regulated crypto investment products. The company previously enhanced transparency by registering BITW with the SEC in 2021.
Bitwise’s move follows Grayscale’s recent success in converting its Bitcoin and Ethereum trusts into ETFs, signalling growing institutional interest in regulated crypto vehicles.
This development underscores the maturation of the crypto market, as asset managers refine investment products to meet investor demand for security, efficiency, and transparency.
