The new strategies aim to manage the downside volatility of crypto futures by rotating into Treasuries when crypto markets are in retreat.
Crypto specialist Bitwise Asset Management filed to convert its three crypto futures ETFs from long-only strategies to strategies that rotate between crypto and U.S. Treasuries exposure based on market trends.
The ETFs will follow Bitwise’s proprietary “Trendwise” rotation strategy, which attempts to minimize downside volatility and achieve long-term price appreciation by rotating out of crypto and into Treasuries when crypto markets are in retreat.
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The conversion is expected to take place on or around December 3, 2024. The funds will change their names and strategies as follows:
- BITC: The Bitwise Bitcoin Strategy Optimum Roll ETF will convert to the Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF
- AETH: The Bitwise Ethereum Strategy ETF will convert to the Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF
- BTOP: The Bitwise Bitcoin and Ether Equal Weight Strategy ETF will convert to the Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF
“Momentum is a well-established factor in virtually every asset class, and it is powerful in crypto as well,” said Matt Hougan. “The new Trendwise strategies capitalize on that momentum through a trend-following strategy that rotates between crypto and Treasuries exposure based on market direction. The goal is to help minimize downside volatility and potentially improve risk-adjusted returns.”
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The strategy follows a proprietary signal that considers the 10- and 20-day exponential moving average (EMA) price of crypto assets like Bitcoin and Ethereum. It generally invests in the funds’ respective crypto assets when the 10-day EMA is above the 20-day EMA—a signal that prices are gaining momentum—and rotates into Treasuries when the reverse is true.
There will be no change to the funds’ expense ratios or tax treatments, and existing investors in the funds do not need to take any action.
The filing augments an eventful 2024 for Bitwise. During the year, the company launched its first spot Bitcoin and Ethereum ETPs (in January and July, respectively); acquired the European crypto fund provider ETC Group in August; and filed for a spot XRP ETP in October.
“At Bitwise, we believe there are many different ways in which investors will want to gain access to this new and emerging asset class,” said Teddy Fusaro. “We’re excited to introduce new groundbreaking strategies for these three ETFs to give investors more options for accessing the market.”
Founded in 2017, Bitwise offers industry-leading education and a broad suite of professional investment products spanning ETFs, private funds, active solutions, and separately managed account strategies. The firm serves as a partner to thousands of investment professionals and financial institutions looking to understand and access bitcoin and other crypto assets.
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