As the emergence of spot ETFs reduces interest in futures crypto ETFs, Bitwise is converting its three futures-based crypto ETFs, including BITC, AETH, and BTOP, into a new single fund - Bitwise Trendwise Bitcoin and Treasury Rotation Strategy ETF (BITC). There will be no changes to the fund's expense ratio or tax treatment, and no action will be required by existing investors in the fund.
According to its public prospectus , BITC aims to achieve its investment objectives by managing investments in Bitcoin futures contracts and U.S. Treasury bonds. Under normal market conditions, the fund invests at least 80% of its assets in Bitcoin futures contracts and U.S. Treasuries and not directly in Bitcoin spot prices.
The fund adopts a "long-flat" trend-following investment strategy, which is an investment method that focuses on market trends. The core concept is to decide the investment direction based on the trend of market price changes and make investments when the market trend is obvious. Invest (long), and stay on the sidelines (flat) when the market trend is not obvious or fluctuates greatly.
Under the strategy, Bitwise will rotate fund exposure between 100% Bitcoin futures contracts and 100% U.S. Treasuries based on proprietary Bitcoin-based signals, the 10-day and 20-day exponential moving averages (EMA). When the 10-day moving average is higher than the 20-day moving average, the fund manager determines that Bitcoin is in a bullish trend and will increase the position of the Bitcoin futures contract, up to 100%. However, when the fund manager determines that Bitcoin is in a short position, The fund may invest all of its assets in U.S. Treasuries and have no exposure to Bitcoin futures contracts for an extended period of time.
Even during the period when the fund holds 100% notional Bitcoin futures contracts, it will still invest up to 75% of its remaining assets in U.S. Treasury bonds, other U.S. government bonds, money market funds, cash and cash equivalents. This is because futures contracts only require a collateral deposit, while the remaining funds can be used in highly liquid assets and earn income.
Matt Hougan, founder of Bitwise, said:
Momentum is an important investment factor, and new trend-following strategies leverage the momentum factor to rotate between cryptocurrencies and Treasuries based on market direction. The goal is to minimize downside Bitcoin volatility and potentially improve risk-adjusted returns.
