The BITW fund saw record initial trading volumes with shares in the crypto fund surging to 369% higher than the value of the Bitcoin, Ethereum, and eight other crypto assets, that it holds.
Bloomberg reported that the divergence indicates that institutional investors, hedge funds, and retail traders, are happy to pay a premium to access the fund through a brokerage rather than buying the underlying assets directly.
Nasdaq reported that more than $67 million of shares were traded in the first three days, making it the highest volume debut of a publicly traded crypto asset fund in U.S. history. The Bitwise 10 fund was listed on the OTCQX Best Market, a marketplace for over-the-counter stock trading, on December 9.
The previous record holder was the Grayscale Ethereum Trust, which had just over $9 million in trading volume during its first three days following its debut on OTCQX on June 25, 2019. Currently, Grayscale is the largest crypto fund with $13.7 billion in assets under management according to its latest tweet. Bitwise is a comparative minnow at this point with just $168 million AUM for this specific fund.
The fund is an index of what it considers the top ten digital assets and rebalances the list monthly. Three assets that are in the top ten by reported market capitalization are absent from the fund; Cardano, Polkadot, and Binance Coin.
The fund has a net asset value (NAV) of $18.55 and a market price of $139 as reported on Wednesday Dec. 16. Bloomberg added that premiums to NAVs often occur in the world of exchange traded funds (ETFs), but they rarely exceed moves of 3% or so.
Co-founder and managing partner at Multicoin Capital, Kyle Samani, said that people who are buying into the fund are saying “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.”