- WisdomTree Fund plans to launch an ETF with a slice of the funds allocated to regulated Bitcoin (BTC) derivative products.
Institutional investors are taking up positions in the Bitcoin market attracting some of the biggest Wall Street hedge funds and financial institutions. WisdomTree Investments, a $60 billion dollar hedge fund, announced the launch of an electronic traded fund (ETF) index comprising of a number of digital assets including BTC.
‘WisdomTree Enhanced Commodity Strategy Fund’
In a registration filing accepted by the U.S. Securities Exchange Commission (SEC) this Tuesday, WisdomTree Investments will start offering ETFs with up to 5% of the assets in Bitcoin. However, due to the regulatory challenges and liquidity pressure of investing in spot markets, the ETF will invest in CME’s cash-settled bitcoin futures only.
The WisdomTree Enhanced Commodity Strategy Fund mainly focuses on traditional commodity asset classes including energy, precious metals, industrial materials and agricultural products. The ETF will invest in the futures market strictly. In a bid to balance the diversified portfolio the fund will be rebalanced monthly with government treasury notes and short term corporate bonds also being included.
WisdomTree’s exploits on blockchain and crypto related products have been well-recorded for the past 20 months or so. In a BEG report in December 2019, we revealed that the hedge fund launched an exchange traded product (ETP) on the Swiss stock exchange (SIX). Furthermore, in January the New York-based firm announced its plans to launch SEC approved stablecoin.
A growing institutional market in bitcoin
Earlier in the year the SEC rejected a Wilshere Phoenix Bitcoin ETF due to questions on the possible manipulation of Bitcoin’s market and security measures on such a product. The launch of partial-BTC ETFs is a step forward in providing institutional investment gateways in bitcoin investing after several rejections by the SEC.
The rising interest in institutions is easily seen in the rising interest in CME derivative products since the halving. Since the start of May, the CME bitcoin options open interest grew 20x capturing over 20% of the total options market share.
Notwithstanding, big institutions are gradually dipping their feet into the field according to a survey carried out by Fidelity Investments earlier this month. The rapid buying rates of newly mined BTC by Grayscale Investments and other top institutions also shows an uptick in the institutional investment.