Bitwise Offers New Web3 ETF as Some Crypto Funds Rebound

The new fund will invest in up to 40 companies using blockchain technology to reshape the internet


Hunter Horsley, CEO, Bitwise


key takeaways

  • Top holdings in the new fund include Coinbase, Roblox and Equinix
  • The largest blockchain ETF, down roughly 50% year to date, improved to flat returns over the past month

Bitwise Asset Management has launched a Web3 ETF as some of the largest crypto-related funds have shown signs of rebounding despite the ongoing crypto downturn.

The Bitwise Web3 ETF (BWEB) tracks a proprietary index that invests in up to 40 companies whose future growth prospects are directly tied to the development of Web3. More than 85% of the portfolio will be companies directly linked to such themes and business activities, according to the company.

Bitwise CEO Hunter Horsley called crypto “the cornerstone of Web3,” adding that many of the companies in the fund’s portfolio are centering their businesses around blockchain technology.

Top holdings in the ETF are Coinbase, Roblox, Equinix, Meta Platforms (formerly Facebook) and Unity Software. 

“Today’s Web3 companies are not only helping reshape the internet as we know it, but they’re among some of the most disruptive and fastest-growing firms in the world,” Horsley said in a statement. “The Bitwise Web3 ETF seeks to capitalize on this great opportunity by offering investors of innovation a straightforward way to access the space.”

The launch follows SoFi bringing a Web3 ETF (TWEB) to market in August. The fund is down 12.5% since launching but is up 3.9% in the past month. 

BWEB is Bitwise’s second ETF. Its Crypto Industry Innovators ETF (BITQ), which launched in May 2021, has about $64 million in assets under management. Down nearly 67% year to date, BITQ is up about 2% from a month ago.

The Amplify Transformational Data Sharing ETF (BLOK) — the largest blockchain ETF in the US with roughly $500 million in assets under management — has also rebounded of late. 

A few days more than three quarters through the year, BLOK was down about 51% for 2022, as of Tuesday morning. But the fund, which has MicroStrategy, IBM and Accenture as its top holdings, has returned 0.1% in the last month.

The ProShares Bitcoin Strategy ETF, which became the first in the US to invest primarily in bitcoin futures upon its launch last October, is up more than 8% in the past 30 days despite year-to-date returns of -57%.

In the last month, bitcoin (BTC) is up 1.3%, while ether (ETH) is down 13.4%. BTC and ETH have each fallen by roughly 60% from 12 months ago. 

Dave Nadig, a financial futurist at VettaFi, said the price of bitcoin and ether should be somewhat disconnected from the “pick and shovel” plays represented by equity funds focused on crypto. He added that the crypto ecosystem has shown resilience in recent months.  

“While this may have been a crypto winter, there are a lot of signs that this is just setting the stage for the next crypto spring,” Nadig told Blockworks.

“Blockchain tech isn’t going away, and the shakeout of hyperbole is actually a positive long term for the industry,” he said.

Other funds not yet showing positive returns are at least trimming losses of late.

The Siren Nasdaq NexGen Economy ETF (BLCN) and the First Trust Indxx Innovative Transaction & Process ETF (LEGR) are down 46% and 27%, respectively, so far in 2022. But BLCN is down 8.5% in the past month, while LEGR is down 2.8% over that span.

Overall, digital asset investment products, including ETFs, tallied a third straight week of inflows last week, according to CoinShares, with roughly $10 million entering such products in that period.

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