Bitwise was founded in 2017, when it launched the first cryptocurrency index, the Bitwise 10, a Private Index Fund
Fees: 2.5% management fee
Minimum investment: $25,000 (as of April 2019)
There is also an offshore version, the Bitwise 10 Index Offshore Fund, which has a $100,000 minimum investment, and a 2.5% management fee. Both funds are available only to accredited investors, and the Offshore fund is limited to “non-U.S. persons and certain Tax-Exempt U.S. accredited investors.”
Bitwise also offers single-currency funds for Bitcoin and Ethereum via the Bitwise Bitcoin Fund and the Bitwise Ethereum fund, launched in December of 2018. Both are limited to accredited investors, have $25,000 investment minimums, but a significantly lower management fees at 1.5%.
Management & Experience: Bitwise’s management (with the exception of their CEO, who was previously at Facebook and Instagram) draws on decades of experience in asset management. The COO was a head of trading at IndexIQ, and a Vice-President at Direxion. On the technology and research side, there is a depth of experience with ETFs, which mirrors their business development strengths: The head of business development was previously a director at the Commonfund, a well-known institutional asset manager. If Bitwise succeeds in helping the cryptocurrency market grow significantly, it will be through the inclusion of institutional clients.
Research: Bitwise provides regular industry commentary on their website, monthly updates on re-balancing of the Bitwise 10 index, and longer thoughtful, well-researched, reports such as “The Case for Crypto In An Institutional Portfolio” published in May 2018.
The ten currencies included in the index are Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin Cash, EOS, Stellar Lumens, Dash, Monero, and Zcash. The criteria for both inclusion in the index and the currencies weight in the index considers their 5-year diluted market capitalization, a trade-volume minimum, concentration limits, and an undefined “compliance” variable. As of April 2019, Bitcoin was 66% of the index, Ethereum 11%, and the rest in the single digits. Bitwise states that their chosen securities account for 80% of the current cryptocurrency market.
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