Bitwise Asset Management is shaking things up for crypto investors by launching a trend-following strategy for its cryptocurrency futures ETFs. This new approach, set to take effect on December 3, 2024, promises to bring a fresh angle to crypto investing, allowing investors to ride the highs of cryptocurrency trends while shielding themselves during market downturns with safer US Treasuries.
These ETFs will dynamically adjust their exposure based on a proprietary algorithm that tracks short-term exponential moving averages in the market. In simpler terms, the funds will increase their crypto holdings when the market is on an upswing, and quickly switch to US Treasuries during bearish trends. This pivot is a bold move designed to minimize risk and maximize potential returns, giving investors more confidence in the volatile world of crypto assets.
How Bitwise’s New ETFs Work
At the core of this new strategy are three major ETFs:
- Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF
- Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF
- Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF
Each of these funds will follow a simple but effective rotation strategy between cryptocurrencies (Bitcoin, Ethereum, or a combination of both) and US Treasuries, depending on market momentum. Bitwise is leveraging a proprietary signal that analyzes short-term exponential moving averages to determine whether to stay invested in crypto or shift to the relative safety of government bonds.
This isn’t just about jumping in and out of crypto, though. The strategy aims to capture strong upward trends while reducing exposure when volatility hits. For instance, when Bitcoin or Ethereum shows upward momentum, these ETFs will increase their stake in the corresponding cryptocurrency. However, if that momentum fades or signals a downtrend, the funds will automatically transition to US Treasuries, providing a cushion during market downturns.
Bitwise’s focus on trend-following allows for a more dynamic approach to asset allocation, a key differentiator from more traditional, static crypto ETFs. This strategy isn’t just reactive; it’s proactive, adjusting holdings in real time based on market signals. For investors, this means the potential for greater returns while still mitigating risk during turbulent market conditions.
What Investors Need to Know
The big shift to this trend-driven strategy doesn’t require any action from current ETF holders. Bitwise has assured investors that expense ratios and tax treatments will remain unchanged. Additionally, by maintaining the existing framework, Bitwise hopes to reassure investors that their new trend-following strategy won’t come with hidden costs or added complexity.
One of the key benefits of this new model is the added stability US Treasuries bring to the table. Historically, Treasuries are seen as safe-haven assets during times of market uncertainty. By pivoting to Treasuries during bearish crypto trends, Bitwise offers a balanced approach, which could be appealing to more risk-averse investors who want exposure to crypto without being fully vulnerable to its volatility.
This December 2024 transition marks a significant moment for Bitwise, positioning its ETF offerings as one of the more innovative solutions for navigating the unpredictable crypto market. By blending traditional asset protection with cutting-edge market signals, Bitwise is looking to cater to both seasoned crypto traders and newcomers seeking a safer entry point into the space.
As the crypto market continues to evolve, this trend-following approach could set a precedent for future ETF strategies that aim to capitalize on market momentum while protecting against downside risks. Bitwise’s move represents a thoughtful evolution in crypto asset management, offering a smarter, more flexible way to invest in an ever-changing financial landscape.
