The New York Stock Exchange Arca has filed to list and trade Bitwise's new exchange-traded product (ETP), which provides direct spot exposure to Bitcoin (BTC) and Ethereum (ETH).
Bitwise's proposed ETP will provide investors with a balanced investment in Bitcoin and Ethereum, weighted by their market capitalization. While some may view these two assets as competitors, Bitwise's Chief Investment Officer Matt Hougan compares them to gold and tech stocks - two independent assets that play important roles in a comprehensive investment portfolio. As Hougan said, "Bitcoin and Ethereum are no longer competitors, just as gold and tech stocks are no longer competitors."
Underlying Assets and Net Asset Value Calculation
The Bitcoin-Ethereum ETP will be listed under NYSE Arca Rule 8.201-E, which governs commodity-based trust shares. Its primary objective is to provide exposure to the value of its held assets, less operating expenses and liabilities. The fund's Net Asset Value (NAV) will be calculated daily using the trusted CME CF pricing benchmarks for Bitcoin and Ethereum.
Bitwise states that this dual-asset ETP will provide a more transparent and reliable way to track the value of Bitcoin and Ethereum. The fund will use the CME CF Bitcoin - US Dollar Reference Rate and the CME CF Ethereum - US Dollar Reference Rate as benchmarks. These benchmarks ensure the fund's pricing reflects the true market value of the two assets.
Impact on the Cryptocurrency Market
If approved, this Bitcoin-Ethereum ETP would be the first of its kind in the US market. Investors can gain exposure to these two digital assets through a single fund, simplifying the process of diversifying a cryptocurrency portfolio.
Bitwise's previous success with Bitcoin and Ethereum spot ETFs also instills confidence in the potential of this new product. The company has already amassed $4.2 billion in assets under management through its existing Bitcoin and Ethereum ETPs. While the ETF space is becoming increasingly competitive, Bitwise is not the only one seeking to offer crypto-related ETPs.
Other participants are also seeking approval for similar products. For example, Franklin Templeton's Cryptocurrency Index ETF, which tracks Bitcoin and Ethereum, is awaiting SEC approval. Unlike Bitwise's product, the Franklin Templeton ETF is not market-cap weighted. Meanwhile, Brazilian asset manager Hashdex has filed to launch its own Bitcoin-Ethereum ETF, the Hashdex Nasdaq Crypto Index US ETF, though the specific timing of its listing is unclear.
While Bitwise has submitted its application, it remains to be seen whether the SEC will approve the ETP for listing and trading on the NYSE Arca. The SEC has been cautious in approving crypto-related financial products, and has recently delayed the approval of other ETFs. Additionally, the SEC is expected to undergo a leadership change in 2025, with Chairman Gary Gensler anticipated to step down, which could impact future decisions on crypto-related ETFs.
