Here is why Bitwise wants to convert its $1.3 billion crypto index fund to an ETF

Bitwise Asset Management is preparing to enhance its crypto product lineup by converting the Bitwise 10 Crypto Index Fund (BITW) into an exchange-traded fund (ETF), according to a Nov. 14 statement.

Bitwise revealed that NYSE Arca has filed to uplist BITW as the first crypto index fund to achieve ETF status. This marks a significant step in transitioning the $1.3 billion publicly traded trust into an exchange-traded product (ETP). Until the transformation is complete, BITW shares will continue trading on the OTCQX Best Market.

Launched in 2017, the BITW Fund offers a diversified portfolio of 10 major cryptocurrencies with varying weightings. As of Nov. 14, Bitcoin dominates the fund at 75%, followed by Ethereum at 16.2% and Solana at 4.4%. Other assets include XRP (1.9%), Cardano (0.9%), Avalanche (0.6%), Bitcoin Cash (0.4%), Chainlink (0.3%), Uniswap (0.3%), and Polkadot (0.3%).

Despite its robust asset lineup, the fund trades at a 25% discount on its net asset value (NAV). This means shares are priced below the value of the fund’s underlying crypto holdings. NAV represents the total value of the fund’s assets divided by the number of shares.

Why conversion?

Bitwise CEO Hunter Horsley emphasized the importance of the fund’s evolution. He noted that the firm introduced BITW to simplify crypto investing for busy individuals. By offering a diversified portfolio that automatically adjusts to include top-performing assets, BITW allows investors to stay ahead without daily monitoring.

Horsley highlighted the current bullish momentum in the crypto market, which has seen Bitcoin and other assets reach record highs following Donald Trump’s election victory on Nov. 5. This surge illustrates the appeal of diversified index funds, especially during periods of market growth.

Further, converting BITW into an ETF brings several advantages for investors. ETFs operate more efficiently and offer enhanced regulatory protections. Unlike traditional trusts, ETFs allow subscriptions and redemptions at NAV, creating an arbitrage mechanism that keeps trading prices closely aligned with the value of the underlying assets.

This move by Bitwise signals its commitment to innovation and investor-focused solutions, ensuring its products meet the evolving demands of the crypto market.

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