There’s no Dow or S&P 500 for cryptocurrencies yet. Bitwise is getting a step closer with new ETF

A new exchange-traded fund from Bitwise that begins trading on Tuesday will give retail investors and financial advisors access to a wide range of cryptocurrencies at once, unlike ETFs that have mostly tracked just one or two cryptocurrencies until now.

Bitwise 10 Crypto Index ETF (BITW) holds the following 10 digital assets: bitcoin, ether, XRP, solana, chain link, Litecoin, cardanoAvalanche, Sui and Polkadot. This transformation makes BITW the first ETF held by a major crypto asset manager, which includes Avalanche, Sui and Polkadot, Bitwise CEO and co-founder Hunter Horsley told CNBC.

“This really meaningfully expands the audience that can access these different assets, [and] Of course, even more for assets that are not spot ETFs, Horsley said Monday.

The fund offers financial advisors and other small investors using funds from an IRA or retirement account access to cryptoassets “where their only option is to use ETFs,” the CEO said.

The ETF was converted from an index fund holding the same coins and began trading with $1.5 billion in assets. Along with broader trading and holding permissions, ETFs offer other advantages over funds that may make them more attractive to some investors, including greater trading flexibility and tax efficiency, as well as lower fees.

This move comes after the Securities and Exchange Commission approved a series of spot Bitcoin ETFs in the US in January 2024. Since then, asset managers have raced to win approval to launch ETFs that track a broader range of digital assets, from altcoins like sui and aptos to memecoins like official Trump and dogecoin.

The ETF opened amid a series of recent pullbacks in the crypto market, with Bitcoin trading as low as $85,000 earlier this month, a drop of more than 30% from its record high of just north of $126,000 in October. Smaller coins with fewer institutional underwriters suffered even more losses during the recent sell-off, creating the risk that this ETF could lead to larger losses for smaller investors.

On the other hand, as the cryptocurrency market matures and coins begin to trade more at their value, an ETF like this offers the potential to diversify the same way a broad index fund like the S&P 500 does with stocks.

“This is the perfect time for many investors who have gained attention since the launch of the Bitcoin ETF but want a more comprehensive solution than having to select specific assets and size a range of different risks to allocate to digital assets,” Horsley said.

Of course, exposure to smaller cryptocurrencies in the fund is limited. BITW allocates 90% of its assets to holdings of the only existing cryptocurrency exchange-traded products (Bitcoin, ether, solana, and XRP). It limits the total weight of all other tokens in the fund to 10%.

The fund will be rebalanced each month; more frequently than most ETFs, which rebalance quarterly or semi-annually.

Bitwise manages more than $15 billion in client assets and has a suite of more than 40 digital asset investment products.

BITW, technically a publicly traded product, rose 1.5% on Tuesday in its new home on the NYSE Arca exchange.