With the adoption of bitcoin ETFs proving successful in international markets and the need for a regulated vehicle more apparent than ever, the wait is finally over: Spot bitcoin ETFs are finally available in the U.S. market.
Until recently, access has been the single greatest barrier to bitcoin adoption. A newly released advisor survey and bitcoin adoption report found that 81% of advisors were unable to buy crypto in client accounts despite nearly 90% of advisors receiving questions about crypto allocations.* Without a compliant investment solution like a bitcoin ETF, providing an effective means of exposure to bitcoin was difficult, if not impossible—which is why 88% of advisors surveyed in the report stated that they were waiting for a spot bitcoin ETF before making an investment in the asset class.
For these advisors, the decision to wait for a spot ETF is clear. Not only does an ETF enhance accessibility, but it also provides investors with protections. With several options for advisors, institutions, and individuals to choose from, new questions and opportunities are surfacing around the most effective way to provide risk-adjusted returns within a diversified portfolio.
Whether an investor is looking to expand their bitcoin holdings or find new ways to diversify their portfolio, the answer to these questions is the Bitwise Bitcoin ETF (BITB). BITB is an ETF professionally managed by crypto specialists with a six-year track record managing crypto assets for financial advisors, family offices, and institutional investors.
The Bitcoin Benefit
With spot ETFs eroding the barrier to bitcoin entry for many, the question has shifted from whether you can allocate bitcoin into your portfolio to whether you should. In evaluating the historical market data for both traditional market and BTC prices, bitcoin has demonstrated a potentially decisive role and substantial benefit to the traditional portfolio.
In a white paper co-authored by Bitwise CIO Matt Hougan and Quantitative Research Analyst Gayatri Choudhury, Bitwise found that the addition of bitcoin to a diversified portfolio contributed positively to a portfolio’s return in 70% of one-year periods, 94% of two-year periods, and 100% of three-year periods since 2014, assuming quarterly rebalancing.**
The magnitude of that positive impact has been significant: In the median case, assuming quarterly rebalancing, a 2.5% allocation to bitcoin would have boosted the three-year risk-adjusted return of a traditional 60/40 portfolio by 12 percentage points.
Through BITB, the bitcoin benefit may be a compelling opportunity for a wide variety of investors looking to gain a differentiated edge on their portfolio. Bitcoin’s historical high returns and low correlations to traditional assets make it an excellent fit for those diversifying their portfolios. At the same time, financial advisors can take advantage of BITB’s low-cost convenience to provide their clients exposure to the world’s largest crypto asset.
BITB: The (Bit)Wise Decision
With the historical benefit of bitcoin in a diversified portfolio, the only question that remains is which investment product works best for you. BITB is a low-cost way to access bitcoin through a traditional ETF with consistent, nationwide support from crypto specialists.
One of the most immediate differentiators between BITB and other bitcoin ETFs is its low fees. At just 0.20% per year, with no fee at all for the fund’s first six months, BITB offers the lowest fees out of all bitcoin ETFs proposed or on the market. In an interview with Bloomberg on Monday, Bitwise CIO Matt Hougan boiled down the decision to offer the lowest fees to a simple investor equation: “The less they pay, the more they keep.”
The low fees associated with BITB make it particularly attractive for those in self-directed IRAs who are overpaying for bitcoin exposure and want to switch to a lower-cost option. Given its lower expenses and, if executed in an IRA, ability to provide exposure without triggering a tax event, BITB has the potential to take a share in the more than $12 trillion IRA market.
Above all, those who invest in BITB get consistent client support from a nationwide team of more than 60 crypto specialists with a six-year track record of managing assets for financial advisors, family offices, and institutional and retail investors.
Not only does Bitwise offer client support, but it further strives to empower clients with access to education and insights and Bitwise’s broad suite of additional crypto solutions, which helps investors access new opportunities in crypto as they evolve.
With the historic approval of bitcoin ETFs by the SEC, the accessibility of bitcoin is bringing investors into a new era of opportunity. Bitwise is providing financial advisors, IRA managers, and retail investors a low-cost, convenient way to capitalize on this opportunity with BITB: an ETF professionally managed by crypto specialists for anyone interested in adding bitcoin to their portfolio.
Risks and Important Information
This material must be preceded or accompanied by a prospectus. Please read the prospectus carefully before investing. To obtain a current prospectus visit bitbetf.com/prospectus.
The Bitwise Bitcoin ETF (BITB) (the “Fund”) is not an investment company registered under the Investment Company Act of 1940 (the “1940 Act”) and is not subject to regulation under the Commodity Exchange Act of 1936 (the “CEA”). As a result, shareholders of BITB do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.
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. The NAV may not always correspond to the market price of bitcoin and, as a result, Creation Units may be created or redeemed at a value that is different from the market price of the Shares. Authorized Participants’ buying and selling activity associated with the creation and redemption of Creation Units may adversely affect an investment in the Shares.
The amount of bitcoin represented by a Share will continue to be reduced during the life of the Fund due to the transfer of the Fund’s bitcoin to pay for the Sponsor’s management fee, and to pay for litigation expenses or other extraordinary expenses. This dynamic will occur irrespective of whether the trading price of the Shares rises or falls in response to changes in the price of bitcoin.
There is no guarantee or assurance that the Fund’s methodology will result in the Fund achieving positive investment returns or outperforming other investment products.
Investors may choose to use the Fund as a means of investing indirectly in bitcoin. Because the value of the Shares is correlated with the value of the bitcoin held by the Fund, it is important to understand the investment attributes of, and the market for, bitcoin.
Bitcoin Risk. There are significant risks and hazards inherent in the bitcoin market that may cause the price of bitcoin to fluctuate widely. The Fund’s bitcoin may be subject to loss, damage, theft or restriction on access. Investors considering a purchase of Shares should carefully consider how much of their total assets should be exposed to the bitcoin market, and should fully understand, be willing to assume, and have the financial resources necessary to withstand the risks involved in the Fund’s investment strategy.
Liquidity Risk. The market for bitcoin 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. Possible illiquid markets may exacerbate losses or increase the variability between the Fund’s NAV and its market price. The lack of active trading markets for the Shares may result in losses on investors’ investments at the time of disposition of Shares.
Regulatory Risk. Future and current regulations by a U.S. or foreign government or quasi-governmental agency could have an adverse effect on an investment in the Fund.
Blockchain Technology Risk. 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.
Nondiversification Risk. The Fund is nondiversified and may hold a smaller number of portfolio securities than many other products. To the extent the Fund invests in a relatively small number of issuers, a decline in the market value of a particular security held by the Fund may affect its value more than if it invested in a larger number of issuers.
Recency Risk. The Fund is recently organized, giving prospective investors a limited track record on which to base their investment decision. If the Fund is not profitable, the Fund may terminate and liquidate at a time that is disadvantageous to Shareholders.
Bitwise Investment Advisers, LLC serves as the sponsor of the Fund. Foreside Fund Services, LLC serves as the Marketing Agent for BITB, and is not affiliated with Bitwise Investment Advisers, LLC, Bitwise, or any of its affiliates.
* “The Bitwise/VettaFi 2024 Benchmark Survey of Financial Advisor Attitudes Toward Crypto Assets,” January 2024. Available at www.bitwiseinvestments.com/crypto-market-insights.
** “Bitcoin’s Role in a Traditional Portfolio,” August 2023. Available at www.bitwiseinvestments.com/crypto-market-insights.