Bitwise Aims to Uplist $1.3B Crypto Index Fund to ETP: A Bold Step Toward Expanding Crypto Investment Access

In a significant move aimed at reshaping the landscape of cryptocurrency investment, Bitwise Asset Management has announced plans to convert its $1.3 billion Bitwise 10 Crypto Index Fund (BITW) into an Exchange-Traded Product (ETP). The filing, made with NYSE Arca via Form 19b-4, is a part of a growing trend among crypto asset managers seeking to bring digital asset investments into more traditional, regulated structures.

What This Conversion Means for Investors

Bitwise's CEO, Hunter Horsley, expressed his belief that ETPs are one of the most efficient and investor-friendly ways to offer exposure to the crypto market. In a statement, he said, “We remain committed to converting BITW to an ETP,” emphasizing the potential benefits in terms of efficiency, ease of access, and regulatory protections for investors.

If the conversion is approved, BITW will transition from its current status on the OTCQX Best Market to a more mainstream structure, offering clearer pricing and greater flexibility for traders. The move is expected to reduce the premium/discount issues that the fund currently faces, making it easier for investors to trade in line with the fund’s true value.

BITW Fund: A Snapshot

Launched in November 2017 as the world's first crypto index fund, BITW provides diversified exposure to a basket of major cryptocurrencies. Currently, the fund holds 10 of the largest digital assets, with Bitcoin making up 74.8% of the portfolio, followed by Ethereum at 16.2% and Solana at 4.4%. Smaller allocations are spread across other prominent cryptos like XRP, Cardano, and Avalanche.

Despite its success, BITW currently trades at a price of $52, while its net asset value (NAV) stands at $62. This creates a gap between market price and actual value, an issue that the ETP conversion aims to address. By adopting the ETP structure, BITW would introduce an arbitrage mechanism that helps to align its market price more closely with its NAV, offering investors a more efficient trading experience.

A Step Toward Broader Crypto Access

The potential transition of BITW into an ETP comes at a time when Grayscale has made similar moves, successfully converting its Bitcoin and Ethereum Trusts into ETFs earlier this year. Grayscale is also working on converting its Digital Large Cap Fund into an ETF, underscoring the growing push for more regulated and accessible cryptocurrency investment vehicles.

For Bitwise, this is just the latest chapter in its ongoing mission to increase transparency and accessibility for crypto investors. The firm first registered BITW with the Securities and Exchange Commission (SEC) in April 2021, a move that offered investors greater visibility into the fund’s holdings and operations.

Strong Performance Amid Challenges

Despite the premium/discount issues, BITW has shown impressive performance in recent months. The fund has generated returns of 50.2% over the past month and a 108.9% gain year-to-date, outpacing the performance of its underlying index, which is up 30% over the same period. However, the ETP conversion could help level the playing field, allowing BITW to trade more efficiently and reduce the volatility often associated with premium pricing.

The Future of Crypto Investments

Should the conversion succeed, it would mark another milestone for Bitwise in its mission to make cryptocurrency investments more accessible and regulated. The move is in line with the firm’s broader goal of giving investors the tools and vehicles they need to participate in the digital asset market, while also ensuring regulatory compliance and transparency.

With the SEC increasingly involved in the regulation of crypto-related financial products, the conversion of BITW to an ETP could set a significant precedent for future crypto funds seeking to offer investors a more seamless, secure, and transparent investment experience.