The fund gives professional investors simplified access to one of the fastest-growing segments of the nearly $3 trillion crypto market.
Bitwise Asset Management, the world’s largest crypto index fund manager with over $1.7 billion in AUM,¹ today announced the launch of the Bitwise Compound (COMP) Fund. The strategy will build on Bitwise’s growing suite of offerings in decentralized finance (DeFi), with the fund investing directly in COMP, the native token of the Compound protocol.
“You’d be hard pressed to find a more dynamic and disruptive movement in financial markets today than DeFi,” said Matt Hougan, Chief Investment Officer of Bitwise. “And one critical part of that space right now is Compound, which provides an efficient way for people to lend and borrow crypto assets — and whose community and governance have proven resilient. Our goal at Bitwise has always been to identify the most promising areas in crypto and to give investors the opportunity to understand and access them efficiently. That’s why we’re so excited to launch this fund.”
Compound’s software runs on the Ethereum network, enabling instant peer-to-peer lending and borrowing, with interest rates set and adjusted continually through algorithms governed by smart contracts. The ease with which users can lend or withdraw assets from Compound’s money market pools allows for greater liquidity and more efficient transactions for many of the most popular crypto assets. Moreover, the revenue-generating characteristics of Compound tokens have attracted increasing numbers of investors seeking alternatives to crypto assets like bitcoin that don’t produce cash flow. For the 30 days ended October 27, 2021, trading volume for COMP tokens exceeded $4.6 billion, with the tokens producing more than $29 million in revenue. And despite having more than $15 billion in deposits on the platform,² Compound’s current market cap stands under $2 billion; Ethereum, by contrast, is at $475 billion.³
The launch of the fund extends Bitwise’s leadership in the DeFi investing space, an area of particular interest today for investors looking to broaden their crypto exposure. Earlier in 2021, Bitwise launched the Bitwise DeFi Crypto Index Fund — the world’s first diversified basket of DeFi crypto assets — in addition to the Bitwise Uniswap (UNI) and Bitwise Aave (AAVE) Funds. As DeFi applications continue to gain popularity as innovative alternatives to traditional Wall Street services, Bitwise has seen growing demand from investors. The firm partners with investment professionals, today serving hundreds of RIAs, financial advisors, multifamily offices, hedge funds, and other institutional investors with a nationwide business development team.
The new Bitwise Compound Fund is currently available to accredited investors for private placement subscription with a $10,000 minimum investment and weekly redemptions. The manager intends to pursue public quotation of the fund with a ticker through OTCQX if and when it is eligible.
The custodian of the Bitwise Compound Fund is Anchorage Digital Bank, N.A., which became the first federally chartered digital asset bank in U.S. history in January 2021, and today secures billions of dollars in crypto assets.
(1) As of October 31, 2021.
(2) Source: Dune Analytics. Data as of October 28, 2021.
(3) Source: Token Terminal. Data as of October 28, 2021.
Risk Disclosure and Important Information
Carefully consider the investment objectives, risk factors, and charges and expenses of any Bitwise investment product before investing. Investing involves risk, including the possible loss of principal. There is no guarantee or assurance that the methodology used by Bitwise or any of the Bitwise investment products will result in any Bitwise investment product achieving positive investment returns or outperforming other investment products. There is no guarantee or assurance that an investor’s investment objectives will be met through an investment into any Bitwise investment product, and an investor may lose money. Investors into any Bitwise investment product should be willing to accept a high degree of volatility in the price of such investment product and the possibility of significant losses. Bitwise investment products involve a substantial degree of risk and are available only to institutional and individual accredited investors.
Certain of the Bitwise investment products 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 a 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, which may impact their 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 assets and blockchain technology represent an attributable and significant revenue stream.
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Diversification may not protect against market risk. Diversification does not ensure a profit or protect against a loss in a declining market.
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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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