The strategy, which leverages decades of research on commodities pricing, seeks to mitigate contango for long-term investors by investing selectively in bitcoin futures across the entire futures curve.
Bitwise Asset Management, one of the world’s leading crypto asset managers, today announced the launch of the Bitwise Bitcoin Strategy Optimum Roll ETF (ticker: BITC). The fund was built to offer investors regulated, professionally managed exposure to bitcoin with a unique design that minimizes pricing inefficiencies that can emerge in bitcoin-linked ETFs focused on front-month or near-month futures contracts.
Research shows that a front-month methodology, while desirable for traders with a short time horizon, can generate roll costs that significantly weigh on long-term performance.¹ BITC aims to address this challenge by using an “optimum roll” strategy that considers all available contracts and intelligently selects the contracts with the lowest level of contango (or the highest level of backwardation) in an effort to maximize long-term returns.²
“Historically, optimum roll strategies in other asset classes, such as oil and natural gas futures, have outperformed strategies focused on front-month or near-month contracts over time,” said Bitwise CIO Matt Hougan. “We believe this same strategy can apply to the bitcoin futures market as it continues to deepen and evolve. With the Bitwise Bitcoin Strategy Optimum Roll ETF, we’re excited to cater to long-term-oriented investors looking for regulated vehicles to gain directional bitcoin exposure.”
Importantly, the fund’s structure as an SEC-regulated, “1940 Act” ETF will make bitcoin exposure available in a format overwhelmingly favored by financial professionals. A recent Bitwise/VettaFi survey of financial advisor attitudes toward crypto found that exchange-traded funds were the preferred method of crypto investing for 68% of advisors. Moreover, for tax reporting, the fund will issue a Form 1099 instead of the typically longer and more complex K-1.
“If there’s anything this past year has reinforced, it's that how you invest in crypto is as important as what you invest in,” said Bitwise CEO Hunter Horsley. “The Bitwise Bitcoin Strategy Optimum Roll ETF gives institutions, advisors, and their clients a professional, regulated solution for adding exposure to bitcoin returns while bypassing the risks of custodying bitcoin directly or investing through novel platforms.”
The custodian of the Bitwise Bitcoin Strategy Optimum Roll ETF is BNY Mellon and the fund’s distributor is Foreside Fund Services, LLC. The ETF is rebalanced monthly.
The launch of the Bitwise Bitcoin Strategy Optimum Roll ETF (ticker: BITC) is part of Bitwise’s broad suite of professional investment solutions for accessing the opportunities in the fast-evolving crypto market. Today, Bitwise’s suite of more than 20 products includes the Bitwise Crypto Industry Innovators ETF (ticker: BITQ), Bitwise Web3 ETF (ticker: BWEB), Bitwise 10 Crypto Index Fund (ticker: BITW), private placement funds, multi-strategy solutions, and separately managed accounts. The number of RIAs, advisor teams, family offices, and institutions that rely on Bitwise for their clients’ crypto exposure doubled in 2022 to over 1,500 firms, who navigate crypto with the support of Bitwise’s nationwide distribution and client service team.
For more information, visit www.bitcetf.com.
(1) See, for example, Gomes, M. “Harvesting Commodity Curve Premiums Through Roll-Yield Differentials” Journal of Alternative Investments, 2015, 18 (2), pp.51-60; Erb, C., and C. Harvey “The Strategic and Tactical Value of Commodity Futures,” Financial Analysts Journal, 62 (2), (2006), pp. 69-97.
(2) Contango refers to a scenario in which the futures price of a commodity is higher than the spot price, while backwardation is the opposite: when the futures price is lower than the spot price.
Risks 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.BITCETF.com. Investors should read it carefully before investing.
Investing involves risk, including the possible loss of principal.
The Fund invests in Bitcoin Futures Contracts. The Fund does not invest directly in or hold bitcoin. As a result, the price of Bitcoin Futures Contracts should be expected to differ from the current cash price of bitcoin, which is sometimes referred to as the “spot” price of bitcoin. Consequently, the performance of the Fund should be expected to perform differently from the spot price of bitcoin. These differences could be significant.
Bitcoin and Bitcoin Futures Contracts are relatively new investments. They are subject to unique and substantial risks, and historically, have been subject to significant price 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.
The market for Bitcoin Futures Contracts is still developing and may be subject to periods of illiquidity. During such times it may be difficult or impossible to buy or sell a position at the desired price.
The value of an investment in the Fund could decline significantly and without warning, including to zero. You may lose the full value of your investment within a single day. If you are not prepared to accept significant and unexpected changes in the value of the Fund and the possibility that you could lose your entire investment in the Fund you should not invest in the Fund.
Certain of the Fund’s investments may be subject to the risks associated with investing in blockchain technology. The risks associated with blockchain technology may not fully emerge until the technology is widely used. Blockchain systems could be vulnerable to fraud, particularly if a significant minority of participants colluded to defraud the rest. Because blockchain technology systems may operate across many national boundaries and regulatory jurisdictions, it is possible that blockchain technology may be subject to widespread and inconsistent regulation.
Currently, there are a limited number of publicly listed or quoted companies for which crypto assets and blockchain technology represent an attributable and significant revenue stream. This concentration in fewer companies may make the Fund more susceptible to adverse events that affect the Fund’s holdings more than the market as a whole.
The Fund is recently organized, giving prospective investors a limited track record on which to base their investment decision. 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.
Bitwise Investment Manager, LLC serves as the investment advisor of the fund. The Fund is distributed by Foreside Fund Services, which is not affiliated with Bitwise Investment Manager LLC, Bitwise, or any of its affiliates.
Based in San Francisco, Bitwise is one of the largest and fastest-growing crypto asset managers, offering both index and active strategies across a wide array of investment vehicles. The firm is known for creating the world’s largest crypto index fund (OTCQX: BITW), a suite of crypto-focused equity and futures ETFs, and investment products that span Bitcoin, Ethereum, DeFi, and NFTs. 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.
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