Bitwise Folds Three Bitcoin and Ethereum Futures ETFs Into Single Fund

The fund's strategy entails periodically shifting exposure between Bitcoin and Ethereum futures contracts and assets like U.S. Treasuries.

Three futures-based crypto ETFs from Bitwise are set to fold into a single providing in December, filings with the U.S. Securities and Exchange Commission (SEC) showed Friday.

The Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF will see its fund shift exposure periodically between Bitcoin and Ethereum futures contracts and assets such as U.S. Treasuries, based on the filing. These changes are prompted by “a proprietary signal,” the firm said, which examines multiple moving averages for cryptocurrency prices.

The new fund will combine the Bitwise Bitcoin Strategy Optimum Roll ETF (BITC), the Bitwise Ethereum Strategy ETF (AETH), and the Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP).

The slated conversion comes after Bitwise entered the spot Bitcoin ETF space alongside financial heavyweights like BlackRock and Fidelity in January, following approval from the SEC. At present, the Bitwise Bitcoin ETF holds nearly 39,000 Bitcoin valued at $2.3 billion, according to CoinGlass data.

The fund employs a momentum-based strategy to investing in Bitcoin and Ethereum futures. When Bitwise’s signal indicates that “prices are gaining momentum,” the fund increases crypto exposure, while seeking refuge in government debt when the opposite trend emerges.

“Momentum is a well-established factor in almost every asset class, and it’s powerful in crypto as well,” Bitwise CIO Matt Hougan said in a press release, adding that the new fund aims to “help reduce downside volatility and potentially enhance risk-adjusted returns.”

Following the launch of its spot Ethereum ETF in July, Bitwise has continued to position itself as a provider of funds offering investors access to crypto through traditional brokerage accounts. Earlier this week, Bitwise filed for a first-of-its-kind application in the U.S. for a spot XRP ETF.

The first futures-based crypto ETF was approved three years ago, when regulators greenlit ProShares’ Bitcoin Trust. However, since the launch of spot-based products, several asset managers have recalibrated their futures-based offerings.

VanEck said last month, for example, that it will liquidate its futures investment product for Ethereum. The firm cited investor demand and liquidity as factors in determining the move.

Bitwise’s new fund will cost investors a 0.85% expense ratio, and its prospectus states that it does not invest directly in digital assets. Because the fund can rotate its exposure into U.S. Treasuries entirely, Bitwise said “there will be periods—and perhaps extended periods—when the Fund has no exposure to Bitcoin futures contracts” at all.

While Bitwise lists the “limited operating history” of its three funds as a potential risk, Bitwise President Teddy Fusaro said in a statement that the firm is charting new territory with the product.

“At Bitwise, we believe there are many different ways investors will want to gain access to this new and emerging asset class,” he said. “We’re excited to introduce new innovative structures for these three ETFs to give investors more options for entering the market.”

The closing of the merger is subject to customary closing conditions, including the receipt of regulatory approval.

Edited by Andrew Hayward

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