Bitwise Launches 2 New Crypto Funds To Address Increased Demand
Bitwise Asset Management has moved to address the increased demand for cryptocurrency index funds, launching two new crypto funds for Bitcoin (BTC) and Ethereum (ETH), the California-based company announced on Wednesday.
The decision to launch the two funds has primarily been “driven by inbound client interest and investor dissatisfaction with existing options,” Bitwise said in its press release.
Another factor that has seen the investor community drawing towards crypto and index funds is the meltdown in the market which has given investors “a unique opportunity,” one that allows them “to enter the market at prices many thought we’d never see again.”
With the launch of the two new funds, Bitwise now has a second and third crypto fund, putting the company alongside Grayscale, one of the leading index funds for digital currencies.
The new investment funds, The Bitwise Bitcoin Fund, and the Bitwise Ethereum Fund will be added to the company’s first crypto index fund offering, the broad-market basket Bitwise 10 Private Index Fund.
The fund tracks crypto assets in Bitwise’s 10 Index, a basket comprising the largest coins on the market, determined by looking at their 5-year diluted market capitalizations. The market caps are rebalanced on a monthly basis.
Hunter Horsley, the CEO of Bitwise said that the firm’s clients have increasingly asked for the launch of crypto-specific funds, despite the drawdown in crypto prices that has seen bitcoin lose over 68 percent of its value this year.
But to investors with an eye to future profits, Horsley said that the price decline had offered a unique opportunity. Investors can now make an entry into the crypto market at very low prices, with BTC for instance currently trading at just above $3,800 and ETH at $103.
The crypto funds will be opened every Wednesday and will target two categories of accredited institutional investors.
The first group will need to put in a minimum investment of $1 million, while the other group of investors will require a minimum of $25,000. Bitwise charges 1.5 percent and 1 percent for smaller and larger clients respectively.
The two crypto funds do not have exit or performance fees and more conveniently, no lock-ups. Investors can enter or exit their positions every Wednesday, every other week. Comparatively, Grayscale also offers its clients crypto exposure via Bitcoin and Ethereum funds, but it has a more extended lock-up period of one year.
The current bear market has hit cryptocurrencies hard, with prices of coins plummeting big time. However, that appears not to have dented appetite for crypto fund products; an aspect witnessed with the performance of one of the largest asset managers Grayscale.
For instance, Grayscale’s year-to-date inflows are reported to be around $330 million, with the company also said to have raised over $81.1 million in Q3. The 2018 inflows are higher than figures recorded in the last two years. In 2017, Grayscale brought in $25 million while the same period in 2016 brought in a mere $17 million.
According to Michael Sonnenshein, a managing director at Grayscale, an increasing number of institutional investors are leaning towards its investment products.
That said, however, not all fund managers have been as successful as Grayscale. Crypto exchange Coinbase reportedly had to shut its highly touted index fund due to a lack of enough interest from investors.
(Source: The Block)
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies