The CIO of a new crypto fund that has returned 220% to investors this year explains

• Matt Hougan is the chief investment officer of San Francisco-based Bitwise Asset Management, whose $185 million Bitwise 10 Crypto Index Fund (BITW) started trading over-the-counter on December 9.
• In an interview with Business Insider, Hougan breaks down the factors supporting bitcoin’s recent surge above $20,000 for the first time and explains why BITW trades at a significant premium to the cryptocurrency.
• He also shares other cryptos worth looking at and another digital currency that could become “the asset of the year in 2021.”
• Visit Business Insider’s homepage for more stories.

Bitcoin was once derided by serious investors as a bubble or a Ponzi scheme. But this year, it has become an irresistible investment for many of them. 

Just this Wednesday, bitcoin topped $20,000 for the first time and proceeded to climb above $23,000 on Friday amid growing optimism about its uses.

“Those of us who have been in the crypto industry for a number of years have expected this moment,” said Matt Hougan, an ETF veteran-turned chief investment officer of cryptocurrency-focused Bitwise Asset Management.

“The core thesis supporting crypto and Bitcoin is that this is a once-in-a-generation style technological breakthrough that’s penetrating multiple multi-trillion-dollar markets,” he added. “The market opportunity is large, but it’s great validation to see us break out to new all-time highs.”

Bitcoin’s 212% rally this year is driven by all types of new investors who had never invested in bitcoin but are now jumping on the bandwagon, Hougan said. 

Most notably, high-profile hedge fund managers such as Paul Tudor Jones and Stanley Druckenmiller have allocated to bitcoin. Corporations like MicroStrategy and Square have invested in bitcoin on their treasury sheets. Even insurance firm MassMutual scooped up $100 million of the digital token last week. 

“Crypto was built on a retail investor base. And it went from zero to $20,000 largely on the back of retail investment and retail belief in the asset,” he said. “Now we are seeing this mainstream adoption by professional and institutional investors who control vastly more assets than retail investors. That’s pushed us to new all-time highs and could push us significantly higher if those trends stay in place.”

A crypto fund that seized investor interest 

Coincidentally, exactly a week before bitcoin surpassed $20,000, the $185 million Bitwise 10 Crypto Index Fund started trading over-the-counter under the ticker symbol “BITW.”

The fund, which tracks an index of the 10 largest cryptocurrencies as weighted by market cap, saw shares trade more than $67 million in their first three days on OTCQX Best Market, making it the most highly traded crypto fund launch in history, according to Bitwise.

The significant investor interest drove shares of the fund up to $71.50 as of midday Friday while their net asset value was $20.24, signaling a stunning 253% premium. The premium was as high as 369% on…