Bitwise crosses $500M in assets under management

Bitwise Asset Management, a cryptocurrency index fund provider, just exceeded $500 million in assets under management.

According to a Jan. 4 announcement, Bitwise “surpassed $500 million in assets under management after reporting $100 million in AUM on October 28, 2020.” This means that the assets managed by the firm reported a fivefold increase in just a couple of months. 

“The speed at which professional investors are moving into crypto right now is remarkable,” said Bitwise co-founder and CEO Hunter Horsley, noting that a growing number of institutional investors are increasingly convinced that it has a place in mainstream portfolios.

Bitwise added that it saw record inflows of capital during the last quarter of 2020 that exceeded all the capital collected in 2018 and 2019 combined. The firm notes that most of this inflow came from investment professionals including financial advisors, hedge funds, corporate balance sheets, and other institutional investors.

Still, it’s worth noting that when Bitwise last reported its AUM on Oct. 28, Bitcoin was $13,438, compared to $31,467 at press time—having more than doubled in price.

Most of Bitwise’s assets—more than  $400 million—are part of its Bitwise 10 Crypto Index Fund, which tracks the performance of the top 10 crypto assets. At least, this is how this index worked until recently. 

As Modern Consensus reported in late December, the asset manager decided to exclude XRP from its fund after the U.S. Securities and Exchange Commission filed an enforcement action alleging that the fourth-largest token by market capitalization is an unregistered security.

Derivatives such as the ones offered by Bitwise are a great tool for institutional adoption of crypto assets.

Still, more widely-accessible derivatives such as exchange-traded funds (ETFs) are believed by many bitcoin proponents to be the holy grail of crypto accessibility for retail investors, and such a product may have a chance to launch relatively soon.

Just a few days ago, Investment management firm VanEck filed with the U.S. Securities and Exchange Commission to launch a Bitcoin exchange-traded fund, or ETF.

While the SEC has repeatedly refused to approve bitcoin ETFs—including several proposed by Bitwise—in the past few years, citing concerns over market price manipulation, the early departure of SEC chairman and ETF opponent Jay Clayton in late December may have changed the dynamic.