Bitwise Transitions Bitcoin, Ethereum Futures ETFs to Dynamic Strategy

Bitwise has announced a significant shift in its investment strategy for three of its Bitcoin and Ethereum futures ETFs. The funds will now alternate between crypto investments and US Treasuries, aiming to capitalize on market momentum while providing protection during downturns.

Key Takeaways

• Bitwise is rebranding its Bitcoin and Ethereum futures ETFs to incorporate a dynamic strategy.

• The new funds will adjust exposure based on market conditions, focusing on crypto during uptrends and US Treasuries during downturns.

• The transition is expected to be completed by December 3, 2024.

• This strategy aims to improve risk-adjusted returns and minimize downside volatility.

Overview of the New Strategy

Bitwise plans to transition its existing ETFs, including the Bitwise Bitcoin Strategy Optimum Roll ETF (BITC), the Bitwise Ethereum Strategy ETF (AETH), and the Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP). These will be rebranded as follows:

• Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF (BITC)

• Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF (AETH)

• Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF (BTOP)

The adjustment is set to take place by December 3, 2024, and comes at a time when Bitwise has also applied for a spot XRP ETF with the US Securities and Exchange Commission (SEC).

How the Trendwise Strategy Works

The Trendwise strategy is designed to enhance risk-adjusted returns by leveraging market momentum. It operates based on a proprietary signal that monitors the 10- and 20-day exponential moving averages (EMA) of crypto prices. Here’s how it works:

1. Upward Momentum: When the 10-day EMA surpasses the 20-day EMA, the funds will invest in crypto assets.

2. Downward Momentum: If the market reverses, the funds will rotate into US Treasuries.

This approach allows the funds to adapt to changing market conditions, aiming to protect investors during bearish trends while maximizing gains during bullish phases.

Industry Reactions

Bitwise's Chief Investment Officer, Matt Hougan, emphasized that this strategy reflects broader trends in asset management. He stated, "The new Trendwise strategies capitalize on that momentum through a trend-following strategy that rotates between crypto and Treasuries exposure based on market direction. The goal is to help minimize downside volatility and potentially improve risk-adjusted returns."

Market analyst Joe Consorti also praised the development, noting that integrating Bitcoin into a rotating investment vehicle could enhance returns for US Treasuries, making it an attractive option for financial institutions.

Impact on Investors

Current investors in the affected ETFs will not see any changes to the funds’ expense ratios or tax treatment. Therefore, no action is required on their part as the transition unfolds.

This strategic shift by Bitwise marks a significant evolution in how cryptocurrency investments are managed, potentially setting a precedent for future ETF strategies in the crypto space. As the market continues to evolve, such innovative approaches may become increasingly common, offering investors new ways to navigate the complexities of digital assets and traditional investments.

Sources

• Bitwise shifts Bitcoin, Ethereum futures ETFs to dynamic crypto and treasuries strategy, CryptoSlate.