Bitwise Investments
Bitwise Investments

Bitwise Investments

What is Bitwise Investments?

Bitwise Investments is a San Francisco-based investment management firm specializing in cryptocurrency funds and indices. Founded in 2017 by Hunter Horsley, a former product manager at Facebook and Instagram, and Hong Kim, a Google veteran and software security expert, Bitwise has become a key player in the digital asset space. It is known for launching the world’s first cryptocurrency index fund, the Bitwise 10 Crypto Index Fund, which tracks a basket of the largest cryptocurrencies weighted by five-year diluted market capitalization.
Bitwise manages various funds, including:
  • Bitwise Bitcoin Fund
  • Bitwise Ethereum Fund
  • Digital Asset Index Fund (in partnership with Morgan Creek Capital)
Beyond managing funds, Bitwise also creates and maintains cryptocurrency indices, some of which are used by other financial product providers. The firm has sought to expand its offerings to retail investors by seeking approval from the U.S. Securities and Exchange Commission (SEC) for exchange-traded products. In 2020, it applied to list shares of its Bitwise 10 Index Fund on OTCQX, a regulated alternative trading system, to enable trading on platforms like Charles Schwab and TD Ameritrade.
Bitwise has also been involved in submitting exchange-traded fund (ETF) proposals linked to cryptocurrency, including proposals for a top 10 cryptocurrency ETF and a bitcoin ETF tied to hard forks, though these were initially denied by the SEC.
In addition to its products, Bitwise has contributed to market transparency by presenting reports to the SEC in 2019 that highlighted dubious trading volume practices by certain exchanges. It identified a list of exchanges with "clean" volume, including major platforms like Binance, Coinbase, Kraken, and Bitfinex, aiming to clarify misconceptions about the size and regulation of the bitcoin spot market.

Use cases powered by Bitwise Investments

Bitwise Investments powers a variety of use cases across different product categories, providing both institutional and retail investors with exposure to digital assets. Here’s a breakdown of the use cases powered by Bitwise through its key offerings:

1. ETFs & Publicly Traded Funds

Use Case: Democratizing Access to Crypto Assets
Bitwise offers publicly traded funds that allow traditional investors to gain exposure to cryptocurrency markets without having to directly manage or store the underlying assets. These funds track indices of major cryptocurrencies, making it easier for investors to diversify their portfolios.
  • Bitwise 10 Crypto Index Fund: Tracks the top 10 cryptocurrencies, giving investors broad exposure to the crypto market.
  • Bitwise Bitcoin Fund: Provides direct exposure to Bitcoin through a regulated financial product.
  • Bitwise Ethereum Fund: Offers exposure to Ethereum, allowing investors to benefit from the growth of the second-largest cryptocurrency by market cap.
Benefits:
  • Simple access to crypto through brokerage accounts.
  • Eliminates the need for direct interaction with crypto exchanges or wallets.
  • Institutional-grade custody and regulatory compliance.

2. Active Strategies

Use Case: Actively Managed Exposure to Digital Assets
Bitwise offers actively managed strategies that seek to outperform passive index funds by taking advantage of market opportunities in crypto assets. These strategies are designed to adjust holdings dynamically based on market conditions, aiming to provide superior risk-adjusted returns.
  • Bitwise Active Funds: Actively managed funds can invest in a range of digital assets and derivative products, capturing opportunities in both bull and bear markets.
Benefits:
  • Active management helps mitigate volatility by dynamically adjusting exposure.
  • Designed for investors looking for enhanced returns over passive strategies.

3. SMA (Separately Managed Account) Strategies

Use Case: Tailored Crypto Portfolios for High-Net-Worth Individuals
Bitwise provides SMA strategies for wealth managers and financial advisors, allowing them to create customized portfolios for their clients with exposure to digital assets. These portfolios are separately managed, offering a more personalized approach to crypto investments.
  • SMA Customization: Wealth managers can build bespoke crypto portfolios for clients based on their specific risk tolerance and investment goals.
Benefits:
  • Full transparency and control over individual crypto asset holdings.
  • Tailored to meet the needs of high-net-worth individuals and family offices.

4. Private Funds

Use Case: Institutional-Grade Exposure to Specific Digital Assets
Bitwise’s private funds cater to institutional and accredited investors looking for exposure to specific cryptocurrencies or groups of digital assets. These funds typically have higher investment minimums and offer more specialized exposure compared to public offerings.
  • Bitwise DeFi Crypto Fund: Focuses on decentralized finance (DeFi) assets, offering exposure to leading DeFi protocols.
  • Bitwise Bitcoin and Ethereum Private Funds: Provide accredited investors with direct exposure to Bitcoin and Ethereum, along with the security of institutional custody.
Benefits:
  • Access to niche crypto markets and themes (like DeFi) not available in publicly traded funds.
  • Designed for sophisticated investors seeking institutional-grade investment products.

Bitwise Investments Community Resources