On Friday, crypto asset manager Bitwise, filed with the US Securities and Exchange Commission (SEC) to convert three existing futures-based exchange-traded funds (ETFs) into a new series of funds utilizing “Trendwise strategies” approach.
This strategy is expected to rotate investments between cryptocurrencies and US Treasuries based on prevailing market conditions, aiming to optimize returns and mitigate risks.
New Strategies Set To Launch By December 2024
According to Friday’s announcement, the proposed funds will implement Bitwise’s proprietary “Trendwise” rotation strategy, which is designed to minimize downside volatility while seeking long-term capital appreciation.
Under this approach, the exchange-traded funds will shift their allocations from crypto assets to Treasuries when the cryptocurrency markets show signs of retreat, thereby protecting investors from potential losses during downturns.
The conversion is anticipated to take effect around December 3, 2024, with the following name and strategy changes:
- BITC: The Bitwise Bitcoin Strategy Optimum Roll ETF will become the Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF.
- AETH: The Bitwise Ethereum Strategy ETF will transition to the Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF.
- BTOP: The Bitwise Bitcoin and Ether Equal Weight Strategy ETF will be renamed the Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF.
Bitwise also assured investors of these funds that there will be no alterations to the funds’ expense ratios or tax treatments, meaning existing investors will not need to take any action as these transitions occur.
This filing marks a significant development in what has already been a busy year for the firm, which launched its first spot Bitcoin and Ethereum ETFs in January and July, respectively, acquired the European crypto fund provider ETC Group in August, and filed for a spot XRP ETF earlier this week.
Crypto And US Treasury Investments
Matt Hougan, Chief Investment Officer at Bitwise, emphasized that momentum is a critical factor across various asset classes, especially in the “highly volatile crypto market.” The new Trendwise strategies aim to leverage this momentum through a trend-following approach.
Specifically, the strategy relies on a proprietary signal that evaluates the 10- and 20-day exponential moving averages (EMA) of Bitcoin and Ethereum prices. When the 10-day EMA is above the 20-day EMA, the funds will invest in the respective cryptocurrencies. Conversely, when the 10-day EMA dips below the 20-day EMA, the funds will rotate into US Treasuries.
Teddy Fusaro, President of Bitwise, highlighted the firm’s commitment to offering diverse access points to the evolving asset class of cryptocurrencies. He stated:
We believe there are many different ways in which investors will want to gain access to this new and emerging asset class. We’re excited to introduce new groundbreaking strategies for these three ETFs to give investors more options for accessing the market
At the time of writing, the largest cryptocurrency on the market is trading at $61,750, up 2.5% over the past 24 hours.
Featured image from DALL-E, chart from TradingView.com