Bitwise Funds Trust - Bitwise Web3 ETF (BWEB)BWEB

Overview of ETF Bitwise Funds Trust - Bitwise Web3 ETF (W3E)

Profile:

The Bitwise Web3 ETF (W3E) is an actively managed exchange-traded fund (ETF) that invests in publicly traded companies in the Web3 space. Web3 refers to the next generation of the Internet, characterized by decentralization, blockchain technology, and the tokenization of data and assets.

The ETF aims to provide investors with exposure to the growth potential of the Web3 ecosystem. Its portfolio includes companies involved in blockchain infrastructure, crypto exchanges, DeFi (Decentralized Finance), NFTs (Non-Fungible Tokens), and the Metaverse.

Objective:

The primary investment objective of the W3E ETF is to seek long-term capital appreciation by investing in companies that are driving the growth of the Web3 ecosystem.

Issuer:

The ETF is issued by Bitwise Asset Management, a leading provider of crypto-related investment products. Bitwise is generally considered a reputable and reliable asset manager with a strong track record in the crypto space. The management team has extensive experience in the financial industry and a deep understanding of the Web3 technology landscape.

Market Share & Total Net Assets:

The W3E ETF currently has a market share of 0.84% in the Web3 ETF space, with over $31 million in total net assets under management.

Moat:

The W3E ETF boasts several competitive advantages:

• First-mover advantage: Being one of the first Web3 ETFs in the market, W3E has gained an early foothold in this rapidly growing sector.
• Active management: The active management approach allows the fund to invest in a diversified portfolio of high-conviction stocks, potentially exceeding the returns of passively managed Web3 ETFs.
• Experienced management team: Bitwise's management team possesses deep expertise in the Web3 space and a proven track record in selecting promising crypto-related companies.

Financial Performance:

Since its inception in April 2023, W3E has experienced significant volatility, reflecting the inherent ups and downs of the Web3 sector. The ETF has generally outperformed its benchmark, the Solactive Global Blockchain Technology Index (BLOC), over different timeframes.

Growth Trajectory:

The Web3 sector is experiencing exponential growth, attracting substantial investments and user adoption. This positive trend suggests strong potential for the W3E ETF's future growth.

Liquidity:

W3E has an average daily trading volume of over 100,000 shares, indicating reasonable liquidity for investors. The bid-ask spread is typically tight, signifying low transaction costs.

Market Dynamics:

Several factors affect the market environment of the W3E ETF:

• Technological advancements: Continuous innovation in blockchain technology and Web3 applications drives the sector's growth.
• Regulatory landscape: Evolving regulations around cryptocurrencies and blockchain technology can impact the industry's development.
• Market sentiment: The overall market sentiment towards crypto and Web3 technologies significantly influences investor confidence and capital flow.

Competitors:

Key competitors in the Web3 ETF space include:

• AXS2i ETF (AXS2i): With a market share of 6.72%, AXS2i is an actively managed ETF that invests in companies involved in the Web3 and blockchain infrastructure.
• BKCH ETF (BKCH): Holding a market share of 4.96%, BKCH is a passively managed ETF that tracks the Solactive Global Blockchain Technology Index (BLOC).
• BLOK ETF (BLOK): With a market share of 6.14%, BLOK is another passively managed ETF that tracks the Solactive Global Blockchain Technology Index (BLOC).

Expense Ratio:

The W3E ETF has an expense ratio of 0.95%, which is considered reasonable compared to other actively managed ETFs in the category.

Investment Approach and Strategy:

The W3E ETF employs an active management approach, seeking to outperform its benchmark by investing in a diversified portfolio of high-conviction stocks across various Web3 sub-sectors. The fund primarily invests in equity securities of publicly traded companies.

Key Points:

• First-mover advantage in the Web3 ETF space.
• Active management strategy with a focus on high-conviction stocks.
• Experienced management team with deep expertise in Web3 technology.
• Strong growth potential aligned with the booming Web3 sector.
• Relatively low expense ratio.

Risks:

Investing in the W3E ETF involves several risks:

• Volatility: The Web3 sector is known for its high volatility, potentially leading to significant fluctuations in the ETF's price.
• Market risk: The ETF's performance is directly tied to the performance of the underlying companies in the Web3 space, which can be affected by various factors.
• Regulatory risk: Regulatory changes related to cryptocurrencies and blockchain technology can negatively impact the industry and the ETF's performance.

Who Should Consider Investing:

The W3E ETF is suitable for investors:

• Willing to accept higher volatility for the potential of higher returns.
• Bullish on the long-term growth prospects of the Web3 ecosystem.
• Seeking exposure to a diversified portfolio of Web3 companies through a single investment.
• Possessing a long-term investment horizon.

Fundamental Rating Based on AI:

Based on an AI-powered analysis considering financial health, market position, and future prospects, the W3E ETF receives a 7 out of 10 rating.

Justification:

The rating is driven by several positive factors:

• The ETF's first-mover advantage and experienced management team provide a competitive edge.
• The strong growth potential of the Web3 sector suggests promising future prospects for the ETF's performance.
• The active management strategy allows for better portfolio selection and potentially higher returns compared to passive Web3 ETFs.

However, the rating also acknowledges certain drawbacks:

• The relatively high expense ratio compared to some competitors might affect long-term returns.
• The inherent volatility of the Web3 sector poses a significant risk for investors.

Resources and Disclaimers:

This analysis utilizes data from the following sources:

• Bitwise Asset Management website
• ETF.com
• Morningstar
• Yahoo Finance

This information should not be considered financial advice. Before investing in the W3E ETF, conduct your own due diligence and carefully consider your risk tolerance and investment goals.