Bitwise's Crypto ETFs Embrace Dynamic Rotation Strategy

Bitwise Asset Management, a leading investment firm in the cryptocurrency space, has announced a significant shift in its approach to crypto futures exchange-traded funds (ETFs). The company plans to convert its three existing crypto futures ETFs from long-only strategies to a dynamic rotation strategy that aims to balance exposure between cryptocurrencies and U.S. Treasuries based on market trends. This strategic move is expected to occur on or around December 3, 2024.

Unlocking the Power of Momentum and Volatility Reduction

Trendwise: Bitwise's Proprietary Rotation Strategy

Bitwise's new "Trendwise" rotation strategy is designed to reduce downside volatility and achieve long-term growth in the crypto market. The strategy works by closely monitoring the market trends and rotating the funds' exposure between cryptocurrencies, such as Bitcoin and Ethereum, and U.S. Treasuries. When the crypto markets show signs of decline, the funds will shift their holdings into Treasuries to minimize losses, while capitalizing on market momentum during upswings by increasing exposure to cryptocurrencies.The Trendwise strategy utilizes a signal based on the 10-day and 20-day exponential moving averages (EMA) of the underlying crypto assets. When the 10-day EMA is higher than the 20-day EMA, the funds will gain exposure to cryptocurrencies, indicating a positive market trend. Conversely, when the 10-day EMA falls below the 20-day EMA, the funds will move into Treasuries to hedge against potential declines.

Embracing Momentum-Driven Investing

Matt Hougan, Bitwise's Chief Investment Officer, emphasized the importance of momentum as a critical factor in most asset classes. The Trendwise strategies are designed to capture this momentum while reducing overall volatility, providing investors with a more balanced and risk-managed approach to crypto investing.Hougan explained, "Momentum is a powerful force in most asset classes, and the Trendwise strategies are designed to capture that momentum while reducing volatility. By dynamically rotating between cryptocurrencies and Treasuries, we aim to minimize losses during downturns and capitalize on market upswings."

Seamless Transition for Investors

Investors in Bitwise's existing crypto futures ETFs can expect a smooth transition to the new Trendwise strategies. There will be no changes to the funds' expense ratios or tax treatments, and no action is required on the part of investors. The conversion process is expected to be completed on or around December 3, 2024.The three ETFs undergoing the transformation include:1. BITC: The Bitwise Bitcoin Strategy Optimum Roll ETF will become the Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF.2. AETH: The Bitwise Ethereum Strategy ETF will convert into the Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF.3. BTOP: The Bitwise Bitcoin and Ether Equal Weight Strategy ETF will be renamed the Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF.

Navigating the Crypto Landscape with Agility

Bitwise's decision to adopt a dynamic rotation strategy for its crypto futures ETFs reflects the firm's commitment to providing investors with innovative and adaptable investment solutions. By leveraging the Trendwise strategy, Bitwise aims to navigate the volatile and rapidly evolving crypto market more effectively, offering investors the potential for long-term growth while mitigating downside risks.As the crypto industry continues to mature and evolve, Bitwise's strategic shift demonstrates the firm's ability to stay ahead of the curve and adapt its investment strategies to meet the changing needs of investors. This move is likely to be closely watched by the broader crypto community, as it could set a precedent for other asset managers seeking to offer more dynamic and risk-managed exposure to the crypto asset class.