Bitwise Asset Management, which is a popular cryptocurrency fund manager, has pointed out that 10 Crypto Index Fund is being bought and sold at a higher premium compared with underlying assets on which the funds has been structured.
The initial trading volumes of units representing BITW fund hit a new record with the value of the cryptocurrency fund skyrocketing by 369% above the aggregate value of Ether (ETH), Bitcoin (BTC) and eight more cryptos that is possesses.
Bloomberg stated that the huge premium reflects the interest of institutional investors, retail traders and hedge funds in having an exposure to cryptos via a brokerage firm instead of purchasing the underlying assets in a straightforward manner.
Nasdaq stated that over $67 million worth shares were transacted in the initial three days, giving it the credit of becoming the largest volume debut of a listed cryptocurrency asset fund in the US history. The Bitwise 10 fund is traded on the OTCQX Best Market, a platform for trading stocks in OTC (over-the-counter) format.
Grayscale Ethereum Trust held the record earlier, with trading volume worth $9 million in the initial three days following its launch on OTCQX on June 25, 2019. At present, Grayscale is the biggest crypto fund with $13.70 billion in assets being administered as per the recent tweet.
Bitwise is relatively a small player currently with a mere $168 million worth assets under management (AUM) for the particular fund.
12/16/20 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
Total AUM: $13.7 billion$BTC $BCH $ETH $ETC $ZEN $LTC $XLM $XRP $ZEC pic.twitter.com/gXma8Xkk2k
— Grayscale (@Grayscale) December 16, 2020
The fund is made of top 10 cryptocurrencies, short-listed on a monthly basis, and undergoes portfolio churning, if necessary. Among the top ten in terms of market cap, three assets are not in the fund’s holdings. They are Cardano, Binance Coin and Polkadot.
The net asset value (NAV) of the fund is $18.55, carrying a market price of $139. Bloomberg further clarified that premiums to NAVs is not a new phenomenon in the domain of exchange traded funds (ETFs). However, the percentage of premium rarely crosses 3%.
Kyle Samani, Co-founder and managing partner at Multicoin Capital, stated that people purchasing the fund units state “I don’t understand Bitcoin, just give me a reasonably constructed index”:
“I don’t think they can justify the premium, I just think they don’t know what they’re buying. That’s not justifiable, that’s just ignorance.”
