Bitwise Forms Active Strategies Team, Citing Institutional Demand
The maturation of liquid cryptocurrency markets has led index fund manager Bitwise to explore active strategies
Matt Hougan, CIO of Bitwise, at Permissionless 2022 | Source: Ben Solomon
key takeaways
- Bitwise’s active strategy team will aim to capitalize on market inefficiencies for its investors
- The firm launched the first-ever cryptocurrency index fund back in 2017
Bitwise Asset Management — a firm known for its crypto index funds — is moving into active strategies, the firm revealed Tuesday, as executives cited growing institutional demand for such offerings.
Jeffrey Park, who joined Bitwise in February, is set to lead the new unit, a spokesperson told Blockworks. Park was a partner focused on research and portfolio management at alternative asset management firm Corbin Capital Partners, where he worked for the last decade.
“A new dimension of opportunity presents itself now as the market structure of liquid crypto has matured,” Park said in a statement. “We believe market-neutral, yield, arbitrage, and quantitative strategies can be combined with top-tier long-oriented approaches to create unique absolute return opportunities.”
Vincent Molino, who has led and supported due diligence efforts at Northern Trust, Mercer and EnTrustPermal, is set to head operational due diligence for Bitwise’s active solutions after joining the company in May.
Denny Peng joins Park and Molino as a risk manager. Peng was at multi-strategy hedge fund complex Millennium Management before joining Bitwise in September.
The new team will first focus on multi-strategy absolute return solutions that seek to capitalize on market inefficiencies while offering low volatility. Bitwise hasn’t explicitly announced the launch of any actively managed funds that would be tradable on public markets just yet.
Still, its foray into active strategies for institutions represents a twist on the indexes Bitwise has become known for. Its Bitwise 10 Crypto Index Fund (BITW), which launched in 2017, was the first index fund of its kind. Bitwise adjusts the fund monthly based metrics such as liquidity, regulatory status and security.
Bitcoin and ether currently make up 61% and 30% of the fund, respectively, followed by much smaller weightings of cardano, solana, polygon and polkadot, among others. BITW’s net asset value has doubled since its launch, but its share price has fallen about 60% since it started trading in December 2020.
Overall, the company managed $1.3 billion in assets at the end of 2021 across strategies offering exposure to blue-chip cryptoassets as well as DeFi and NFTs. More recently, it partnered with Multicoin Capital and venture capitalist Matthew Ball to create a metaverse-focused index fund in June. It launched a Web3 ETF last month made up of public companies with Web3 exposure, such as Coinbase and Roblox.
Those funds are currently down around 16% and 5% since their inceptions, respectively.
Bitwise Chief Investment Officer Matt Hougan said in a statement that crypto has historically moved in four-year cycles — with three years of rising prices and one year of drawdowns.
“Amid this cycle’s consolidation, many investors have quietly been doing their work and now perceive opportunity,” Hougan added. “We see higher-quality and stronger tailwinds than ever before. We’re excited to add active strategies alongside our broad suite of index-based strategies to enable investors to access the opportunities in crypto.”
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