Bitwise Asset Management has filed a Form 19b-4 with the U.S. Securities and Exchange Commission (SEC), seeking approval to list a groundbreaking exchange-traded product (ETP) on NYSE Arca. The proposed ETP will offer direct spot exposure to Bitcoin (BTC) and Ethereum (ETH), two of the largest cryptocurrencies by market capitalization. The product will be weighted according to their market caps, allowing the fund to dynamically adjust to changes in the relative dominance of these assets.
According to Bitwise, this ETP is designed to simplify portfolio allocation for investors seeking exposure to the crypto market's two most established assets. By dynamically adjusting to the market capitalizations of Bitcoin and Ethereum, the ETP ensures that investors hold a balanced, evolving portfolio that reflects the growth and changes in the crypto market.
Matt Hougan, Bitwise CIO, Explains the Dual-Asset Approach
In a statement, Matt Hougan, Chief Investment Officer of Bitwise, emphasized that Bitcoin and Ethereum should not be viewed as competitors, but rather as complementary assets within an investment portfolio.
“Bitcoin and ether aren’t competitors any more than gold and tech stocks are competitors,” Hougan said. “So when investors ask us which is better to add to their portfolio, often our answer is ‘both.’ This fund aims to make that recommendation easy and actionable, providing balanced exposure to the world’s two largest crypto assets. I think it’s going to be a huge hit with investors.”
Bitwise has a strong track record in the cryptocurrency space, with its existing spot Bitcoin and Ethereum ETPs collectively managing $4.2 billion in assets under management. The firm’s latest filing represents a significant step forward in the development of cryptocurrency-related financial products in the U.S. market.
A First-of-Its-Kind Dual-Asset ETP
If approved, the Bitwise Bitcoin-Ethereum ETP would be the first of its kind in the U.S., offering investors simultaneous exposure to Bitcoin and Ethereum in a single product. This product would allow investors to easily balance their portfolios with both assets, which have become the dominant players in the crypto space.
However, Bitwise is not the only firm seeking approval for a dual-asset cryptocurrency product. Other firms, including Franklin Templeton and Brazilian asset manager Hashdex, have also filed to launch similar offerings. Franklin Templeton's Crypto Index ETF, for example, aims to track both Bitcoin and Ethereum but is not market cap-weighted. Hashdex’s proposed Nasdaq Crypto Index US ETF, which would also track BTC and ETH, was filed in June and is still awaiting approval.
Bitcoin and Ethereum: Different Use Cases, Same Market Dominance
As of November 26, 2024, Bitcoin and Ethereum have a combined market capitalization exceeding $2.1 trillion, making up the lion’s share of the cryptocurrency market. Despite their dominance, investors tend to perceive the use cases of the two assets differently, which could influence their decision to hold one or both in a portfolio.
Bitcoin is primarily regarded as a digital store of value, similar to gold, optimized for security and long-term monetary use cases. As the first cryptocurrency and the most widely recognized, Bitcoin’s role as a “digital gold” has been solidified by its limited supply and robust security features.
Ethereum, on the other hand, is the backbone of the Ethereum blockchain, the largest decentralized ecosystem for applications (dApps). Ethereum powers decentralized finance (DeFi) protocols, non-fungible tokens (NFTs), and a wide range of other blockchain-based applications. With over $110 billion in total value locked (TVL) in DeFi applications, Ethereum has become the go-to platform for developers and enterprises looking to build decentralized applications.
Traditional finance giants, including BlackRock, Visa, and Franklin Templeton, have recognized Ethereum’s potential and have chosen the platform for their own blockchain-related products and services. The growing adoption of Ethereum-based technologies further solidifies its position as the second-largest cryptocurrency by market capitalization.
Looking Ahead: What’s Next for Cryptocurrency ETFs?
The approval of Bitwise’s Bitcoin-Ethereum ETP would be a major milestone in the development of cryptocurrency exchange-traded products in the U.S. market. While the SEC has yet to make a decision, the growing interest from institutional investors and financial giants in cryptocurrency markets suggests that similar products may soon be more commonplace.
As the cryptocurrency market continues to evolve, products like Bitwise’s Bitcoin-Ethereum ETP may offer investors a simplified and diversified way to gain exposure to the leading assets in the space. For those seeking an easy way to access both Bitcoin’s store of value qualities and Ethereum’s robust decentralized ecosystem, this product could be an attractive option—especially as institutional and retail interest in crypto continues to rise.
The potential approval of Bitwise’s Bitcoin-Ethereum ETP on NYSE Arca could mark a significant shift in how investors approach the cryptocurrency market. By offering a single product with exposure to both Bitcoin and Ethereum, the ETP would provide a balanced investment option for those looking to gain access to the two largest crypto assets. With other similar products awaiting approval, the cryptocurrency ETF landscape is poised for further innovation, and investors will likely have more choices for gaining exposure to this rapidly growing market.
November 2024, Cryptoniteuae