First Bitcoin ETF of 2023 Launches as Cryptos Gain

The year’s first bitcoin exchange-traded fund, which invests in futures rather than following a crypto index, began trading as cryptocurrencies are on a roll and outperforming roiling stock and bond markets. 

The Bitcoin Strategy Optimum Roll ETF (BITC), the third bitcoin fund from Bitwise Asset Management, was little changed on volume of just over 1,000 shares in midday trading on its first day. The fund has $625,000 in assets under management. 

BITC hits the market as investors have been bidding up crypto prices following 2022’s meltdown. Bitcoin has gained 70% so far this year, while the S&P 500, as measured by the SPDR S&P 500 ETF Trust (SPY) has eked out a 2.4% increase and the Vanguard Total Bond Market ETF (BND) is 3.1% higher. 

“This is a great time to be launching,” Bitwise Chief Investment Officer Matt Hougan told etf.com. “Bitcoin has had a tremendous start to the year, and the long-term outlook is bright.” 

BITC’s approach is to invest in futures contracts, while its larger fund, the $52.6 million Bitwise Crypto Industry Innovators ETF (BITQ) tracks an index.  

BITC takes a page from oil and gas commodity traders by investing in what it considers the best-priced futures contracts, rather than the more common practice of buying so-called front-month orders that are closest to expiration, Hougan said. 

The fund is aimed at long-term investors and pitched to financial advisors, registered investment advisors and institutions, he noted.  

“They need a bitcoin-linked ETF designed for them,” Hougan explained. “Retail investors have lots of options, but financial advisors can’t use apps on their phones. They prefer ETFs.”  

San Francisco-based Bitwise manages about $54 million in its ETF offerings. Its other fund is the Bitwise Web3 ETF (BWEB). BITQ has gained 62% so far this year, while it has lost 61% year over year. BWEB, which launched in October 2022, has added 28% in 2023. 

Bitwise isn’t optimistic that a spot bitcoin ETF, the subject of Grayscale Investment’s lawsuit against the Securities and Exchange Commission, will be approved this year, Hougan said.  

Contact Ron Day at [email protected] or follow him on Twitter at @RonDayETF