Bitwise Proposes Bitcoin-Ethereum Market Cap Weighted ETP to SEC

Bitwise Asset Management, a leading crypto-focused asset manager, has filed a proposal with the United States Securities and Exchange Commission (SEC) to launch a groundbreaking exchange-traded product (ETP) that offers investors exposure to both Bitcoin (BTC) and Ethereum (ETH).

The product, filed under Form S-1 and awaiting SEC approval, will be traded on the NYSE Arca.

This proposed ETP will allocate its holdings based on the relative market capitalization of Bitcoin and Ethereum, currently, the two largest cryptocurrencies, accounting for approximately 70% of the $3.2 trillion global crypto market.

Bitwise’s Chief Investment Officer, Matt Hougan, emphasized the complementary nature of Bitcoin and Ethereum. He said:

“Bitcoin and ether aren’t competitors any more than gold and tech stocks are competitors,”

Bitwise Bitcoin-Ethereum ETP: Will SEC Approve?

Bitcoin, often regarded as a digital store of value, is the oldest and most secure blockchain, designed primarily for monetary transactions.

On the other hand, Ethereum’s versatile blockchain powers a dynamic ecosystem of decentralized finance (DeFi), non-fungible tokens (NFTs), and other real-world applications.

This diversity in use cases makes the combination of Bitcoin and Ethereum an attractive option for investors seeking stability and exposure to cutting-edge blockchain applications.

According to Bitwise, the weighted allocation based on market capitalization ensures that investors’ portfolios follow the market dynamics of these two cryptocurrencies.

Today, NYSE Arca filed to list a Bitwise ETP that would hold both spot bitcoin AND ether, weighted by market cap.

The goal: Give investors balanced exposure to the two largest crypto assets in the world in an easy-to-access format. pic.twitter.com/TcBpQM8OhW

— Bitwise (@BitwiseInvest) November 26, 2024

With Bitcoin and Ethereum’s combined market cap of $2.25 trillion, the ETF could attract significant interest from retail and institutional investors alike.

The CIO, Matt Hougan, stated,

“This fund aims to make adding both assets to a portfolio straightforward, providing a single product for balanced exposure.”

Regulatory Implications Amid Market Correction

The approval of spot Bitcoin ETFs earlier this year and spot Ether ETFs in May signaled a shift in the SEC’s approach to digital asset investment products.

However, the commission’s leadership will change in January 2025 with the resignation of SEC Chair Gary Gensler.

The potential appointment of a new, potentially crypto-friendly chair under President-elect Donald Trump may further influence the regulatory environment.

The SEC has faced criticism for its cautious approach toward crypto.

Still, recent approvals of ETFs tied to assets like Bitcoin, Ether, and Solana have encouraged asset managers to explore new opportunities.

Notably, Bitwise has recently taken early steps to launch its Bitwise Solana ETF by filing to establish a trust entity in Delaware, signaling a possible SEC filing soon.

If approved, the ETF would track Solana, the fourth-largest cryptocurrency, joining efforts by VanEck and 21Shares.

Bitwise has seen significant growth in 2024, with assets under management (AUM) reaching $5 billion by October, fueled by the success of its Bitcoin ETF and the recent acquisition of Ether-staking provider Attestant.

Yesterday, November 26, U.S. spot Bitcoin ETFs faced a sharp reversal in investor sentiment, seeing $438.4 million in outflows after a five-day inflow streak that brought in $3.4 billion.

Bitwise’s BITB led the decline with $280 million in outflows, followed by Grayscale’s GBTC and Fidelity’s FBTC, which saw $158.2 million and $134.7 million withdrawn, respectively.

Despite the overall downturn, BlackRock’s IBIT ETF bucked the trend with $267.8 million in net inflows, maintaining its dominance with $31.6 billion in cumulative inflows.

In contrast, spot Ethereum ETFs saw $2.8 million in net inflows, with strong trading volumes of $711.2 million.

Broader crypto markets recorded record weekly inflows of $3.13 billion, driven by Bitcoin’s dominance with $3 billion and rising interest in altcoins like Solana, which attracted $16 million.