What Is The Bitwise HOLD 10 Cryptocurrency Index?
Bitwise Asset Management, found online at BitwiseInvestments.com, just launched a cryptocurrency index fund called the HOLD 10 Index. Find out how it works today in our review.
Bitwise Investments is a financial services startup company. On October 16, the company announced the release of its private index fund. The fund is passively managed, which means it will hold a basket of cryptocurrencies based on their market cap without actively trading those currencies.
The HOLD 10 index includes a 5 year inflation schedule. The funds are held in 100% in cold storage except for times when the portfolio is rebalanced, which takes place once a month to account for fluctuations in pricing among the basket of assets.
As you might expect, the HOLD 10 fund has performed incredibly well this year. Based on numbers posted on the official website, the fund is up 692.5% this year, while Bitcoin alone is up 497.5%. The S&P 500, in paltry comparison, is up 0.03%.
The HOLD 10 private index fund holds the top 10 cryptocurrencies by market cap. It’s a traditional investment vehicle. When you “buy into” the fund, you’re buying shares – not coins.
The fund comes with an annual management fee of 2 to 3%. There’s a minimum investment of $10,000 USD.
Overall, Bitwise Asset Management claims to be the “world’s first cryptocurrency index fund.” With that in mind, let’s take a closer look at how it works.
How Does the HOLD 10 Fund Work?
Over the past 365 days, the HOLD 10 fund would have provided returns of the following, according to data posted on BitwiseInvestments.com:
- 0.70% average daily return
- 4.01% standard of daily return
- 3.31 annualized Sharpe ratio
Overall, the fund allows you to “own the market instead of picking winners.” The days of bitcoin being a niche, undiscovered currency are gone. However, the industry still has enormous room to grow as a whole. The coins in the HOLD 10 index are designed to comprise 85% of the market (which is the combined market cap percentage of the top 10 cryptocurrencies).
The important thing emphasized by the fund is that they provide better returns than just owning a single cryptocurrency – like bitcoin. Bitcoin has a 0.62% average daily return this past year, for example, and a 2.90 annualized Sharpe ratio. In addition, bitcoin’s market share percentage has decreased against its competitors.
With that in mind, Bitwise claims to be a secure way of owning cryptocurrency – or at least, of owning a stake in cryptocurrency:
“Securely storing coins is imperative but difficult. Storing coins yourself in a wallet is feasible for some, but you’re at risk of being hacked, phished, or even just making a typo. The Bitwise HOLD 10 Private Index Fund uses state-of-the-art security procedures to protect your assets. The custodian puts all underlying coins in an institutional-grade 100% cold storage vault air-gapped from the internet. Your shares are titled in your name, and can’t be stolen.”
As mentioned above, you don’t actually own digital tokens. You’re buying shares in an investment fund that owns a basket of digital tokens. Obviously, this comes with advantages and disadvantages.
Composition of the Fund
The overall goal of the HOLD 10 index is to represent the performance of the cryptocurrency market by tracking a basket of the ten largest coins by market cap. The fund takes a number of factors into account, including eligibility criteria, inflation adjustment of market capitalization, distinguishing circulating supply, rebalancing policies, composing price data, data sources, and policies for hard forks and other rare events.
All coins selected in the fund are held in proportion to their inflation adjusted market capitalization. Inflation adjusted market capitalization is calculated as (composite price) x (circulating supply + additional supply publicly scheduled for the next 5 years).
With that in mind, here are the coins currently in the fund, as well as their breakdown based on current market share:
- Bitcoin: 61.61%
- Ethereum: 18.92%
- Ripple: 7.15%
- Bitcoin Cash: 3.38%
- Litecoin: 2.59%
- Dash: 1.93%
- ZCash: 1.70%
- Monero: 0.98%
- Ethereum Classic: 0.94%
- NEO: 0.80%
Who’s Behind Bitwise Asset Management?
Bitwise Asset Management was launched by co-founders Hunter Horsley and Hong Kim. Horsley was previously a product manager at Facebook and Instagram, and he went to business school at Wharton. Hong Kim is a former software security researcher in the South Korean military, and studied computer science at the University of Pennsylvania.
The company is based in San Francisco.
Final Thoughts On Bitwise HOLD 10 Index
Bitwise Asset Management has launched the world’s first cryptocurrency index fund. Called the HOLD 10 index, the fund holds the top 10 cryptocurrencies by market capitalization, rebalanced monthly. The funds are kept in 100% air-gapped cold storage until rebalancing.
The fund has a 2 to 3% annual management fee and a minimum investment of $10,000 USD.