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 began trading Tuesday will give retail investors and financial advisors access to a broad range of cryptocurrencies in one shot, as opposed to the ETFs so far that have mostly just tracked just one or two cryptocurrencies.

The Bitwise 10 Crypto Index ETF (BITW) holds the following 10 digital assets: Bitcoin, ether, XRP, Solana, Chainlink, Litecoin, Cardano, Avalanche, Sui and Polkadot. The conversion makes BITW the first ETF by a major crypto asset manager to include Avalanche, Sui and Polkadot, Bitwise CEO and co-founder Hunter Horsley told CNBC.

“This really meaningfully expands the audience that can access exposure to these different assets, [and] of course, for assets that don’t have spot ETF, all the more,” Horsley said Monday.

The fund offers exposure to crypto-assets for financial advisors as well as other smaller investors who are using funds from an IRA or retirement account “where their only choice is to use ETFs,” said the CEO.

The ETF was converted from an index fund which held the same coins and it starts trading with more than $1 billion in assets. Along with broader permissions to trade and hold, ETFs offer other advantages over funds that may make them more attractive to some investors, including increased trading flexibility and tax efficiency, as well as lower fees.

This move follows the Securities and Exchange Commission’s approval of a rash of spot bitcoin ETFs in the U.S. in January 2024. Since then, asset managers have jockeyed for approvals to launch ETFs tracking a wider range of digital assets, from altcoins like sui and aptos to memecoins such as official Trump and dogecoin.

The ETF launches amid a series of recent pullbacks in the crypto market that saw bitcoin trade as low as $85,000 earlier this month, more than 30% off its record high of just north of $126,000 hit in October. Smaller coins with fewer institutional vehicles were hurt even more during the recent sell-off, exposing a risk this ETF will lead to bigger losses for smaller investors.

On the flipside, as the cryptocurrency market matures and the coins began trading more on their own merits, an ETF like this offers the potential for diversification, like a broad index fund such as the S&P 500 does with equities.

“It’s the perfect time for a lot of investors who’ve now been paying attention since the launch of the Bitcoin ETF, but want a more comprehensive solution to allocating to digital assets than having to pick specific assets and size a bunch of different exposures,” said Horsley.

To be sure, the exposure to the smaller coins in the fund is limited. BITW allocates 90% of its holdings to assets that are held by existing single-coin exchange-traded products— Bitcoin, ether, solana and XRP. It caps the combined weight of all other tokens in the fund at 10%.

The fund will be rebalanced every 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, which is technically an exchange-traded product, was 1.5% higher Tuesday on its new home at the NYSE Arca exchange.