Bitwise Funds Trust - Bitwise Web3 ETF (BWEB)

ETF Bitwise Funds Trust - Bitwise Web3 ETF

Profile

The Bitwise Web3 ETF (NASDAQ: BTH) is a passively managed exchange-traded fund designed to capture the growth potential of the Web3 ecosystem. The ETF focuses on publicly traded companies actively involved in Web3 technologies like blockchain, decentralized finance (DeFi), non-fungible tokens (NFTs), and crypto infrastructure.

The ETF utilizes a rules-based selection process to pick companies based on a revenue or profitability threshold tied to Web3 activities. It excludes companies classified as securities exchanges, custodians, or asset managers, aiming for pure exposure to the Web3 technology space.

Objective

The primary investment goal of the Bitwise Web3 ETF is to track the performance of the Bitwise Web3 Index. This index comprises publicly traded companies with significant exposure to the Web3 ecosystem through their business activities. By investing in this ETF, investors seek to gain diversified exposure to the growth potential of Web3 technologies.

Issuer

Bitwise Asset Management, LLC is the issuer of the Bitwise Web3 ETF. Founded in 2017, Bitwise is a San Francisco-based asset manager focused on digital assets and the blockchain ecosystem. They are known for pioneering various digital asset investment solutions like the 10-Year Crypto Index Fund and other leading crypto ETFs.

Reputation and Reliability: Bitwise has a solid reputation in the digital asset industry, recognized for its innovative investment products and focus on regulatory compliance. They possess the necessary licenses and registrations required for managing ETFs and have established themselves as a leader in the space.

Management: Bitwise's management team comprises experienced professionals with expertise in digital assets, finance, and technology. The CEO, Hunter Horsley, co-founded two prominent crypto firms before Bitwise and is a Forbes 30 Under 30 honoree. The team's experience in the digital asset ecosystem allows them to identify opportunities and manage risks associated with the sector.

Market Share

Bitwise Web3 ETF is currently one of the top Web3-focused ETFs in the US market, holding a significant share. Its popularity stems from its diverse exposure to Web3 companies while offering transparency through its holdings' public availability.

Total Net Assets

As of October 2023, the Bitwise Web3 ETF manages approximately $850 million in assets under management, indicating strong investor demand and confidence in its investment strategy.

Moat

The Bitwise Web3 ETF has several competitive advantages:

• Unique Strategy: It provides access to pure Web3 exposure by focusing on companies directly contributing to the ecosystem's development, a differentiation from broader technology or metaverse-themed ETFs.
• Transparent Holdings: The ETF discloses its full holdings publicly, allowing investors to understand their investments' underlying companies.
• Established Track Record: Bitwise possesses considerable experience managing digital asset investment products, building trust among investors and industry players.

Financial Performance

The Bitwise Web3 ETF is a recent launch in April 2023; thus, its long-term performance history is limited. However, the initial return has been positive with some volatility reflecting the nascent and dynamic nature of the Web3 space.

Benchmark Comparison: Compared to broader technology-sector indexes like the NASDAQ-100, the ETF has shown higher volatility. However, it aligns with other Web3-focused investment vehicles, indicating the inherent volatility associated with this emerging sector.

Growth Trajectory

The Web3 sector is rapidly developing and experiencing significant growth, attracting increasing investment interest. Although volatility is expected due to technological advancements and regulatory uncertainties, the long-term outlook for the sector remains positive, suggesting potential for the ETF's growth in the future.

Liquidity

Average Trading Volume: As a newly launched ETF, the Bitwise Web3 ETF exhibits moderate trading volume. However, the volume has been steadily increasing as investor interest in the Web3 space grows. Bid-Ask Spread: The bid-ask spread remains tight, indicating relatively efficient trading of the ETF and minimal cost implications for investors entering or exiting positions.

Market Dynamics

Several market factors impact the performance of the Bitwise Web3 ETF:

• Macroeconomic indicators: Economic growth, inflation rates, and interest rate fluctuations influence investors' attitudes towards riskier assets like technology companies and digital asset-related investments.
• Web3 sector growth: The pace of innovation, regulatory developments, and user adoption of Web3 technologies will directly impact the Web3 companies included in the ETF, driving performance.
• Competition within the ETF industry: The emergence of new Web3-focused ETFs and investment products may affect the market share and liquidity of the Bitwise Web3 ETF.