A new exchange-traded fund (ETF) from Bitwise began trading on Tuesday, offering retail investors and financial advisors access to a diverse range of cryptocurrencies in a single investment. Unlike previous ETFs that mainly tracked only one or two cryptocurrencies, the Bitwise 10 Crypto Index ETF (BITW) encompasses 10 digital assets: Bitcoin, Ethereum, XRP, Solana, Chainlink, Litecoin, Cardano, Avalanche, Sui, and Polkadot.
The conversion of BITW marks it as the first ETF by a leading crypto asset manager to include Avalanche, Sui, and Polkadot, according to Bitwise CEO and co-founder Hunter Horsley, speaking to CNBC. "This really meaningfully expands the audience that can access exposure to these different assets, and of course, for assets that don't have spot ETF, all the more," he stated on Monday.
The fund aims to provide exposure to crypto-assets for financial advisors and smaller investors who use funds from IRA or retirement accounts "where their only choice is to use ETFs," the CEO explained.
The ETF was converted from an index fund holding the same cryptocurrencies and launches with over $1 billion in assets under management. ETFs offer more flexible trading options and tax efficiency along with typically lower fees, which may appeal to investors compared to traditional funds.
This move comes after the Securities and Exchange Commission approved a series of spot Bitcoin ETFs in the U.S. in January 2024. Since then, asset managers have sought approval to launch ETFs that track a wider variety of digital assets, including altcoins like Sui and Aptos and meme coins such as official Trump and Dogecoin.
The ETF is being introduced amid recent downturns in the crypto market, which saw Bitcoin's price drop to around $85,000 earlier this month, 30% lower than its record high of over $126,000 achieved in October. Smaller cryptocurrencies experienced even more significant losses during the sell-off, highlighting potential risks that the ETF may pose for smaller investors.
On the other hand, as the cryptocurrency market evolves, an ETF such as this may offer diversification benefits akin to a broad index fund like the S&P 500 in equities.
"Itâs the perfect time for many investors who have been paying attention since the launch of the Bitcoin ETF but desire a more comprehensive solution to digital asset allocation, beyond picking individual assets and sizing various exposures," Horsley remarked.
The BITW ETF limits its exposure to smaller coins, allocating 90% of its holdings to assets supported by existing single-coin exchange-traded productsânamely, Bitcoin, Ethereum, Solana, and XRP. The remaining coins in the fund are capped at a combined weight of 10%.
The ETF will rebalance monthly, which is more frequent than the typical quarterly or semi-annual rebalancing done by most ETFs.
Overall, Bitwise manages more than $15 billion in client assets across a suite of over 40 digital asset investment products. BITW, which is technically an exchange-traded product, showed a 1.5% increase on Tuesday at its new listing on the NYSE Arca exchange.