California-based Bitwise Asset Management on Wednesday announced the launch of two new crypto funds, a move that could put the firm up against one of the largest investors in the market for digital currencies.
The two funds, The Bitwise Bitcoin Fund and the Bitwise Ethereum Fund, join the asset manager’s crypto basket Bitwise 10 Private Index Fund. Bitwise says its clients have been clamoring for crypto-specific funds to invest in despite the bear market. “The 68% drawdown in bitcoin prices this year has given investors a unique opportunity to enter the market at prices many thought we’d never see again,” said Hunter Horsley, Bitwise CEO.
While the fund aims to provide more liquidity than other products on the market, it will only be open to so-called accredited investors. It appears Bitwise is positioning itself to compete with Grayscale, one of the earliest cryptocurrency fund managers. Grayscale offers clients exposure to Bitcoin and Ethereum through its own funds.
Unlike Grayscale’s products, which require a one-year lock up period, investors in Bitwise’s funds are able to exit and enter positions on a weekly basis. Grayscale charges a 2% fee for its Bitcoin Investment Trust, whereas Bitwise is charging 1.5% for smaller clients and 1% for larger clients. Grayscale manages $1.5 billion in crypto assets.
As the crypto market bleeds reds, some asset managers appear to be humming along. Grayscale raised $81.1 million in Q3 and had year-to-date inflows of $330 million, as the The Block previously reported. The $330 million figure outperforms inflows through three quarters in previous years. In the same amount of time, the firm brought in a mere $25 million in 2017 and $17 million in 2016. Michael Sonnenshein, a managing director at the firm, told The Block institutional investors are showing more interest in its family of crypto investment products than ever before. Still, others have not been as successful. Coinbase shut its index fund after it failed to attract the necessary number of clients.