San Francisco’s Bitwise Asset Management just filed a registration statement for a publicly-offered cryptocurrency index ETF.
Bitwise sent its application to the Securities and Exchange Commission (SEC), which is actively processing crypto ETF applications from a number of significant names from across the industry.
In a statement, the company revealed that the new ETF will track the returns of Bitwise’s index of the 10 largest cryptocurrencies. That index is weighted by market cap, which means the index will track the performance of the top 10 cryptocurrencies, weighted proportionally by their market cap. The fund will hold approximately 46% bitcoin (BTC), for example, followed by Ethereum, Ripple, Bitcoin Cash, and other cryptocurrencies.
Bitwise calls its weighted index the HOLD 10 Index. The ETF will cater to both retail and institutional investors.
As reported by Forbes, Bitwise co-founder and CEO Hunter Horsley believes the index will be a valuable tool for investors because it isn’t tied to the performance of any single coin. Whether bitcoin’s dominance rises to 90% or altcoins eventually overwhelm bitcoin, investors will gain the same exposure to the top 10 cryptocurrencies adjusted each month.
“What things will look like five or ten years from now is pretty unclear,” Horsley told Forbes during an interview. “The HOLD 10 index offers broad exposure, it updates monthly and changes to adapt to the market.”
Coins like Monero and Litecoin have dipped in and out of the top 10, for example, and coins like Stellar Lumens (XLM) have grown to occupy a top 5 position. Investors who haven’t adjusted their portfolio over time risk missing out on new trends. The HOLD 10 index won’t hold 10 specific cryptocurrencies. Instead, it will hold the 10 largest cryptocurrencies by market cap, with changes updated monthly.
Today, Bitwise’s HOLD 10 Index is occupied by bitcoin, Ether, Ripple, Bitcoin Cash, Stellar Lumens, Litecoin, Dash, Zcash, Monero, and Ethereum Classic.
Bitwise will reportedly use a 5-year-diluted market cap and other eligibility criteria to mitigate crypto-related risks for investors.
While the ETF is in the works, Bitwise already has a crypto index fund available to investors. The company offers a fund based on the HOLD 10 Index. That fund was among the earliest privately-offered cryptocurrency index funds.
Now it’s up to the SEC to decide whether or not a cryptocurrency-based ETF should be approved. The SEC has rejected previous crypto ETF approvals – like the ETF proposed by Cameron and Tyler Winklevoss in 2017. However, reports suggest that the SEC is warming up to the idea of launching a crypto ETF, and the first ETFs may be approved as early as September 2018.
Stay tuned for more information about the Bitwise crypto ETF. The ETF, if approved, could be one of the most popular funds in the space. Investors wouldn’t be trapped with one currency – as they would be with some of the proposed bitcoin ETFs. Instead, the ETF would track the motions of crypto markets over time, opening the door for powerful long-term growth regardless of where the market goes.