Bitwise is making strategic shifts to its Bitcoin and Ethereum futures ETFs, transitioning them toward a more dynamic strategy that alternates between cryptocurrency and US Treasuries. In an announcement on Oct. 4, the company outlined its plan to convert three of its existing ETFs to embrace a “Trendwise” approach. This development marks a significant evolution in how these assets are managed.
Precisely, the existing Bitwise Bitcoin Strategy Optimum Roll ETF (BITC), Bitwise Ethereum Strategy ETF (AETH), and Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP) are set to be rebranded. They will become the Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF (BITC), the Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF (AETH), and the Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF (BTOP). These changes are expected to be finalized by Dec. 3, aligning with Bitwise’s application to the US Securities and Exchange Commission (SEC) for a spot XRP ETF earlier in the week.
Understanding the Bitwise Trendwise ETFs
The Trendwise strategy fundamentally adjusts the ETFs’ exposure based on prevailing market conditions. In prosperous market periods, the focus will be on cryptocurrency investments. Conversely, during downturns, the strategy pivots toward US Treasuries to ensure stability. The Trendwise approach enhances risk-adjusted returns by leveraging market momentum while safeguarding against declines.
How does the Trendwise mechanism work? It operates using a proprietary signal that evaluates the 10- and 20-day exponential moving averages (EMA) of cryptocurrency prices. When the 10-day EMA is higher than the 20-day EMA, indicating positive momentum, the ETFs will invest in crypto assets. Conversely, a reversal prompts a shift to US Treasuries.
Benefits of the Bitwise Shift
Bitwise CIO Matt Hougan highlighted that this innovative strategy reflects a broader trend in asset management. According to him, “These new Trendwise strategies harness the momentum of a trend-following approach, seamlessly switching between crypto and Treasury investments, depending on market direction. They aim to reduce downside volatility and enhance risk-adjusted returns.”
Moreover, Bitcoin market analyst Joe Consorti expressed enthusiasm, noting, “This is significant for Bitcoin as a macro asset. US Treasuries are favored globally by financial institutions, and incorporating Bitcoin into a rotating investment framework elevates UST returns, offering a compelling diversification option.”
Importantly, these updates will not alter the funds’ expense ratios or tax treatment, hence no action is required from current investors.
Key Insights for Investors
The proposed shift by Bitwise towards a Trendwise strategy reflects a dynamic approach to managing cryptocurrency and treasury investments. These changes aim to optimize returns while offering a safety net during market downswings, demonstrating an advancement in modern asset management strategies.
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