Bitwise Crypto Trust Jumps 72% Since Debut While Market Sags

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The Bitwise 10 Crypto Index Fund has vaulted more than 70% since its debut Wednesday, the latest sign of an insatiable appetite for risk assets in global financial markets.

The fund, which is listed under the ticker BITW, jumped about 23% to $44.75 on Friday, bringing gains since its over-the-counter trading kick-off to 72%. About 565,000 shares have changed hands daily on average over that period. Meanwhile, the Bloomberg Galaxy Crypto Index slipped about 3% during the same timespan.

The launch by San Francisco-based Bitwise Asset Management Inc., which oversees more than $100 million in crypto, came in the week of the spectacular IPO pops of DoorDash Inc. and Airbnb Inc., which more than doubled on its first day. It has also benefited from a paucity of exchange-traded investment products featuring a mix of the biggest cryptocurrencies.

Bitwise Crypto Trust Jumps 72% Since Debut While Market Sags

“A publicly traded crypto index fund provides more certainty to investors of quickly diversifying and safely gaining exposure to a very popular crypto market,” said Alexandros Tsilipanos, head of trading practices and crypto at AvaTrade in Dublin. “Traders have been expecting such an index for years, and it is not surprising that the volumes surpassed expectations.”

The market-cap-weighted fund is 75% Bitcoin and 13% Ethereum, with the remaining 12% allocations across XRP, Litecoin, Chainlink, Tezos and other cryptocurrencies.

U.S. regulators still don’t permit crypto exchange-traded funds. The Bitwise fund -- which technically is a trust -- has traded about $60 million since Wednesday.

Institutional investing in digital assets has long centered more around private placements done in trusts. The pioneer, Grayscale Investments, has created a host of trusts which often trade at premiums to their net asset values. Bitwise’s works in a similar way.

“The market takes a few days to find a stable clearing price for the premium” over net asset value, Matt Hougan, chief investment officer of San Francisco-based Bitwise Investments, told Bloomberg.

©2020 Bloomberg L.P.

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