The First Crypto Industry ETF Offering Pure-Play Exposure to the “Picks and Shovels” Companies Driving Growth in the Cryptocurrency Sector
Bitwise Asset Management, one of the largest and fastest-growing crypto-specialist asset managers, with AUM over $1.5 billion,ˆ today announced the launch of the Bitwise Crypto Industry Innovators ETF (NYSE: BITQ). BITQ aims to provide investors with exposure to valuable public companies that are participants in the growing bitcoin and cryptocurrency sector.
The new ETF offers a way for investors to gain exposure to the crypto market without the challenges of directly holding crypto assets like bitcoin and ethereum.
BITQ seeks to track the Bitwise Crypto Industry Innovators 30 Index, designed with Bitwise’s industry expertise to capture “pure-play” companies engaged in actual, material activity in the crypto sector. Additionally, the index includes companies with at least $100 million of liquid crypto assets on their balance sheet.
In most cases, companies in the new index derive at least 75% of their revenue from directly servicing cryptocurrency markets or have at least 75% of their net assets accounted for by direct holdings of liquid cryptoassets. Such companies may, for example, offer crypto brokerage services, financial and banking services, mining solutions, technology solutions, or analytics solutions. The index rebalances quarterly.
“Like e-commerce and mobile before it, crypto is a disruptive technology creating massive opportunities for new companies to emerge as winners,” said Matt Hougan, CIO of Bitwise. “Until recently, most great crypto innovators were private companies, but that’s changing rapidly. Today, there’s a growing set of public companies capitalizing on crypto, and more to come. BITQ aims to identify these businesses and give investors access.”
The index is designed specifically to capture the unique characteristics of the crypto equity market. For example, the index has a “fast-entry” rule that allows new IPOs and direct listings to enter the index one day after their debut, allowing it to quickly adapt to the rapidly changing market. As an example of this rule’s impact, on April 14, 2021, one of the largest names in cryptocurrency, Coinbase, went public. On April 15, 2021, Coinbase qualified for inclusion in the index that BITQ tracks at a 10% weight.
“Over the past few years, many investors have had to watch from the sidelines as a select few have reaped the rewards of stellar cryptocurrency returns,” said Hunter Horsley, CEO of Bitwise. “We’ve heard time and again from clients that the primary challenge has been finding a way to access the incredibly complex and fast-moving crypto space. With BITQ, our aim is to make crypto investment opportunities available through traditional investing platforms and a familiar, liquid, and cost-effective ETF. We are thrilled to see this space continue to grow as investors increasingly gravitate toward this transformative asset class.”
Bitwise manages a growing suite of investment funds, including one of the largest crypto index funds, the first “DeFi” crypto index fund, and a number of other strategies. The firm focuses on partnering with investment professionals, and today serves RIAs, multifamily offices, financial advisors, and other institutional managers.
The BITQ fund tracks the Bitwise Crypto Industry Innovators 30 Index. Developed by Bitwise with input from Moorgate Benchmarks’ index research team, the index is calculated and distributed by Moorgate Benchmarks, a rapidly growing index calculation and benchmark administration company based in London, England with deep expertise in the index space. Exchange Traded Concepts, an ETF platform provider, serves as the investment adviser to the BITQ fund, and SEI Investment Distribution Co., a provider of investment management services, is the distributor of BITQ.
ˆAs of May 7, 2021
Risk Disclosure and Important Information
Carefully consider the fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s full or summary prospectus, which may be obtained by visiting (www.BITQETF.com). Investors should read it carefully before investing.
Investing involves risk, including the possible loss of principal. There is no guarantee or assurance that the methodology used to create the Index will result in the Fund achieving positive investment returns or outperforming other investment products. Indices are unmanaged and do not include the effect of fees. One cannot invest directly in an index.
The Fund is non-diversified and will not invest in crypto assets directly or through the use of derivatives and also will not invest in initial coin offerings. The Fund may, however, have indirect exposure to crypto assets by virtue of its investments in Crypto Industry Innovators that use one or more crypto assets as part of their business activities or that hold crypto assets as proprietary investments.
In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments and investments in small companies typically exhibit higher volatility.
Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s shares and the possibility of significant losses. An investment in the fund involves a substantial degree of risk.
Certain of the Fund’s investments may be subject to the risks associated with investing in crypto assets, including cryptocurrencies and crypto tokens. Because crypto assets are a new technological innovation with a limited history, they are highly speculative asset. Future regulatory actions or policies may limit the ability to sell, exchange or use a crypto asset. The price of a crypto asset may be impacted by the transactions of a small number of holders of such crypto asset. Crypto assets may decline in popularity, acceptance or use, thereby impairing its price.
The technology relating to crypto assets and blockchain is new and developing. Currently, there are a limited number of publicly listed or quoted companies for which crypto asset and blockchain technology represents an attributable and significant revenue stream.
Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.
Exchange Traded Concepts, LLC serves as the investment advisor of the fund. The Fund is distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates.
Based in San Francisco, Bitwise is one of the largest and fastest-growing crypto asset managers. As of March 31, 2022, Bitwise managed $1.2 billion across an expanding suite of investment solutions. The firm is known for managing the world’s largest crypto index fund (OTCQX: BITW) and pioneering products spanning Bitcoin, Ethereum, DeFi, and crypto-focused equity indexes. Bitwise focuses on partnering with financial advisors and investment professionals to provide quality education and research. The team at Bitwise combines expertise in technology with decades of experience in traditional asset management and indexing, coming from firms including BlackRock, Blackstone, Meta, and Google, as well as the U.S. Attorney’s Office. Bitwise is backed by leading institutional investors and asset management executives, and has been profiled in Institutional Investor, CNBC, Barron’s, Bloomberg, and The Wall Street Journal. For more information, visit www.bitwiseinvestments.com.