Bitwise

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Bitwise
Bitwise logo.png
Founded 2017
Headquarters San Francisco, California
Key People Hunter Horsley, CEO
Products Bitcoin index funds
Twitter @BitwiseInvest
Facebook Page
Website Bitwise Homepage
Blog Bitwise Blog

Bitwise Asset Management ("Bitwise") is a cryptocurrency asset advisory and management firm. It also creates indexes and has partnered with Morgan Creek Digital, another digital asset-focused investment manager.

Bitwise ETFs

On July 24, 2018, Bitwise filed an application to the U.S. Securities and Exchange Commission (SEC) to register a bitcoin exchange traded fund (ETF) to be listed for trading on Intercontinental Exchange Group Inc.'s NYSE Arca Inc. exchange.[1] In October 2019, the SEC rejected the proposal.[2]

NYSE Arca filed another application to trade a Bitwise Bitcoin ETF on January 28, 2019, and the SEC published the application in the Federal Register for 45 days of public comment on February 11, 2019.[3]

On March 29, 2019, CoinDesk published an article taking aim at Bitwise's report in which it noted that two of the "good" exchanges identified by Bitwise, Binance and Bitfinex, were themselves suspect primarily because of their inability to secure stable banking relationships.[4]

In January 2020, Bitwise submitted a note to the SEC requesting the withdrawal of the registration request, saying the decision was “consistent with the public interest and protection of investors.”[5] Matt Hougan, global head of research for Bitwise, said that Bitwise intends to refile the application at some point. “We remain fully committed to the development of a bitcoin ETF,” he said.[6]

On May 12, 2021, Bitwise launched the Bitwise Crypto Industry Innovators ETF, or "BITQ." It is the first ETF that the SEC has permitted to include the word "crypto" in its name. 85 percent of BITQ consists of stocks for companies that derive at least 75 percent of their revenue from “directly servicing cryptocurrency markets,” or who have 75 percent of liquid crypto assets or more in their possession. Among those companies are Coinbase and MicroStrategy.[7]

Fake bitcoin trading volume reporting

Bitwise attended a meeting on March 20, 2019, with SEC staff members during which it provided the results of a study of exchange trading of bitcoin. According to the report, approximately 95 percent of global reported trading volume comes from suspect sources. The study concluded that the trading volume data from the following ten exchanges are reliable: Poloniex, Kraken, Binance, Bitfinex, Bitstamp, ItBit, Coinbase, Gemini and Bitflyer.[8] The study is available here. Other contemporaneously issued studies produced by the research firms Crypto Integrity and The TIE concluded that 88 percent and 75 percent of reported exchange trading data were suspect.[9]

Binance CEO Changpeng Zhao responded to Bitwise's Twitter post about its report. He said it was an "excellent report," but that "sadly, most investors who can't tell real vs fake volumes won't read such a detailed report." Binance was acknowledged by Bitwise to be the largest bitcoin exchange to meet its standards for reporting "actual volume." This sparked an intense argument over Twitter that included Larry Cernak and Frank Chaparro from The Block, a crypto-centric news site. Chaparro accused Zhao of having an ego "so tiny and fragile that constructive criticism, critical reporting, is viewed as 'attacking' and 'not being positive'." Chaparro also told Zhao to "get a spine."[10]

10 Crypto Index Fund

Bitwise launched the 10 Crypto Index Fund on December 9, 2020. Organized as a trust rather than an ETF, the fund is traded in the OTC market with the symbol BITW. Its holdings are heavily weighted toward bitcoin (75%) and Ether (13%). [11]

The fund, which is intended to track the Bitwise 10 Large Cap Crypto Index, held bitcoin, Ether, Ripple, Litecoin, Bitcoin Cash, Chainlink, Stellar, EOS, and Tezos at its launch. The fund did not hold Cardano although Cardano is included in the Index itself.[12]

The price of the 10 Crypto Index Fund soared 72% after its launch despite the bitcoin market trading sideways during the time. About $60 million worth of shares in the trust changed hands during the first three days of trading.[13]

Bitwise, a computer term

Bitwise is also a standard computer sciences term that has nothing to do with bitcoin or other cryptocurrencies. Bitwise refers to logical operations between two bits of data. Bitwise is a level of operations that involves working with the smallest units of data, the individual bits. Bitwise operations include "and," "or," "and/or," etc.[14]

References

  1. Bitcoin Fever Persists With Fresh ETF Proposal. Wall Street Journal.
  2. SEC Rejects Bitwise’s Latest Bitcoin ETF Proposal. Coindesk.
  3. NYSE Arca Rulemaking. Securities and Exchange Commission.
  4. Fake Volume on Crypto Exchanges Isn’t the Half of It. CoinDesk.
  5. Form RW Bitwise Bitcoin Etf Trust Registration Withdrawal Request. The Block.
  6. Bitwise withdraws bitcoin ETF proposal. The Block.
  7. Bitwise Rolls Out First ETF To Use ‘Crypto’ In Its Name. Barron's.
  8. Memorandum, File No. SR-NYSEArca-2019-01. Securities and Exchange Commission.
  9. Most Bitcoin Trading Faked by Unregulated Exchanges, Study Finds. Wall Street Journal.
  10. Binance CEO Zhao Morphs Into Bitcoin Grouch in Crypto Twitter Brawl. CCN.
  11. Bitwise’s Crypto Index Fund Becomes Available to US Investors. CoinDesk.
  12. https://www.bitwiseinvestments.com/funds/Bitwise-10. Bitwise.
  13. Bitwise Crypto Trust Jumps 72% Since Debut While Market Sags. Bloomberg.
  14. Definition Bitwise. WhatIs?.