Bitcoin

Bitwise Brings The Bitcoin Ethos To Wall Street

Published

4 months ago

August 31, 2024

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Company Name: Bitwise Asset Management

Founders: Hong Kim and Hunter Horsley

Date Founded: December 2016

Location of Headquarters: San Francisco, CA and New York, NY

Amount of Bitcoin Held in Treasury: Undisclosed

Number of Employees: 65

Website: https://bitwiseinvestments.com/

Public or Private? Private

In 2016, Hong Kim and his co-founder at Bitwise Asset Management (Bitwise), Hunter Horsely, were living the startup life — working from a living room in San Francisco and looking for a project that they could develop into a business.

While experimenting with various ideas, none of which were gaining much traction, their friends wouldn’t shut up about Bitcoin. Plus, by early 2016, every venture capital firm in Silicon Valley was focused on Bitcoin, as well.

“We wanted to avoid it for a long time because [there was] too much hype,” Kim told Bitcoin Magazine. “But then, just by osmosis, we spent more and more time thinking about it.”

By the end of the year, after doing their homework on Bitcoin, Kim and Horsely had incorporated Bitwise, a bitcoin-first crypto asset management firm that would provide wrappers for bitcoin so that customers could purchase these assets via traditional brokerages.

Eight years later, Bitwise was one of the 11 US firms to issue a spot bitcoin ETF; it’s currently the 5th largest US spot bitcoin ETF as per the amount of assets under management (AUM). This is in part due to the Bitcoin enthusiasts who’ve purchased it because of how Bitwise has maintained the Bitcoin ethos as it’s interfaced with Wall Street.

Bitwise vs. All Other Spot Bitcoin ETF Issuers

There are a number of factors that differentiate the Bitwise Bitcoin ETF (BITB) from its competitors.

For one, Bitwise is the only company that issues a US spot bitcoin ETF that publishes the addresses of its bitcoin holdings, embracing the idea of transparency, a core Bitcoin tenet.

“Even now, many, many months have passed and still we’re the only Bitcoin ETF that discloses its holding addresses,” said Kim. “You can go to a Bitcoin block explorer and check our on-chain holdings.”

Kim also made the point that Bitwise is the only spot bitcoin ETF issuer that proactively communicates with its customers via social media.

“We are on Twitter talking about a product and answering questions,” explained Kim.

“I’ll explain anything and engage with the community. If there’s anything they’re upset about [regarding] the products, they can yell at us and we respond and take them seriously,” he added.

What is more, Kim pointed out that Bitcoin remains Bitwise’s primary focus, which makes the company much different from other spot bitcoin ETF issuers like BlackRock or Invesco who manage a plethora of other types of assets.

“We’ve been around for seven years or so and this is the only thing that we talk about,” said Kim.

“When prices go down when there’s a bear market, We don’t rotate to emerging markets or fixed income or whatever,” he added.

“There might not be that big of a difference between BlackRock and Invesco or BlackRock or Franklin Templeton, but there’s a big difference between BlackRock and Bitwise.”

Lastly, Bitwise has committed to giving 10% of its ETF fee profits to three nonprofits that support Bitcoin Core developers — OpenSats, Brink and the Human Rights Foundation (HRF) — for 10 years.

Donating To Open-Source Developers

While many in the Bitcoin community have praised Bitwise for donating to Bitcoin Core developers, Kim sees this contribution as more of an obligation and less as a sacrifice.

“As a Bitcoiner, I feel that it’s not really a donation,” said Kim.

“The US taxpayer doesn’t think that they’re donating to the military budget,” he added.

“That’s not a donation. That’s your security budget.”

Kim went on to explain that while Bitwise does manage some other crypto assets, two-thirds of the company’s holdings is bitcoin. For this reason, he views supporting Bitcoin Core developers as contributing the technology that buoys his livelihood.

“If you’re like BlackRock, where you have all sorts of other [assets] and bitcoin is only one of them, then maybe you don’t feel that way,” Kim said in regard to why a company like Bitwise cares about bitcoin more than some of the bigger traditional financial institutions that issued spot bitcoin ETFs.

“If you are like me or are in an economic situation like me and you care enough about Bitcoin, then it’s not an optional matter that the Bitcoin network is as secure as it can be,” he added.

Kim, Bitwise’s CTO, who has a background in cybersecurity, explained why open-source developers are essential to Bitcoin, noting that many who don’t understand how open-source technology works misperceive what Bitcoin developers do. He made the argument that the majority of Bitcoin developers aren’t there to make radical changes to Bitcoin, but to keep it functional as it interfaces with other software.

“You can have an opinion about the latest contentious soft fork proposal or whatever, but 95% of the devs that we’re talking about don’t work on that,” Kim explained.

“The 50 or so core devs that do this day in and day out, that’s not what they’re spending time on. Whenever there’s a new version of Linux or Mac or Windows, guess what — we need to make sure that Bitcoin Core compiles on that version,” he continued.

“Somebody needs to make sure that the software we depend upon continues to be compatible, well-documented, and runnable.”

On A Mission

While Bitwise does a lot to differentiate itself from its competitors, Kim wants Bitwise to do something more profound than just being one of the better US spot bitcoin ETF issuers.

“There are ways of thinking about a business as the product [it offers] or how it’s different from its competitors, but I think there’s another way of looking at a company as like, ‘What are you here to do?’” explained Kim.

He shares that he and Horsely didn’t start by asking themselves this question, though, now, it seems to be at the forefront of his mind.

“I want Bitwise to be the company that helps accelerate and guide this movement, because it’s such an important thing for the world to have public money that everyone can access and that nobody controls,” said Kim.

After sharing this, Kim acknowledged what he felt many might be thinking as they read this: You’re offering exposure to bitcoin’s price within the walled garden of traditional finance.

“TradFi and Bitcoin culture are inevitably colliding and people rightfully have concerns and some kind of dissonance about that,” said Kim. “That was really top of mind for me.”

Kim reiterated that this is why Bitwise chose to donate to open-source Bitcoin developers, make their Bitcoin addresses public and engage with the Bitcoin community. And he also shared some information on what Bitwise is working on next: redeemable bitcoin.

Redeemable Bitcoin

Bitwise is currently speaking with policymakers in Washington, DC in efforts to have Bitwise facilitate in-kind redemptions of bitcoin from the Bitwise Bitcoin ETF. In layperson’s terms, Kim wants Bitwise customers to be able to withdraw the bitcoin in which they’ve invested via the ETF if they so please, whereas, right now, customers can only withdraw the cash value of the bitcoin in which they’ve invested via bitcoin ETF.

“There are gold ETFs where you can redeem, even as an individual retail investor, and get gold coins and bars delivered to your door,” explained Kim.

“You redeem in-kind without incurring a taxable event. There’s no reason that a bitcoin ETF shouldn’t be able to do that,” he added.

“That would be a product that I would be proud of.”

Kim believes that if Bitwise can make redeemable bitcoin a reality for investors, then spot bitcoin ETFs like BITB have the potential to become some of the biggest on-ramps to Bitcoin.

“Bitcoin ETFs are a huge improvement [in Bitcoin onboarding] in that most people have brokerage accounts,” said Kim, who added that it’s much easier to get family and friends to invest in bitcoin when they don’t have to go through the hassle of setting up an account with a Bitcoin or crypto exchange.

“If your uncle at the Thanksgiving table is convinced and wants to put $100 into bitcoin, you no longer have to go, ‘Wait a minute. First buy a ledger for $40…’ [Now, it’s] just two taps and you have a hundred dollars worth of Bitcoin exposure,” he added.

“But then, at any point in their journey, if they are so inclined, they can withdraw that. And in that sense, it can become a really clean and simple on-ramp.”

While Kim acknowledged that many are skeptical this will ever happen — speculating that Wall Street wants as much bitcoin within walled gardens as possible — he also noted that many felt the same way about the spot bitcoin ETFs ever being issued. He requested some patience as Bitwise persists in its efforts to knock down the wall between Bitcoin and traditional finance.

“There’s a way of looking at Bitcoin ETFs as a clean and easy on-ramp and off-ramp and the lowest friction one for the average person,” said Kim.

“That would be my ideal world, and that is a world that Bitwise is currently working on,” he added.

“In that world, the ETFs and the on-chain world aren’t as separate, but rather they can have a close relationship.”

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Altcoins

Bitwise CIO Matt Hougan Predicts Institutional Interest in Altcoins, Says 2025 the Year of Crypto Diversification

Published

10 hours ago

December 22, 2024

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Bitwise CIO Matt Hougan says a wave of institutional interest in altcoins is coming next year, largely due to potential regulatory clarity and more exchange-traded funds (ETFs).

In a new interview with Bloomberg, Hougan says that institutional money is in the early stages of broadening out to other crypto assets besides just Bitcoin (BTC).

Hougan forecasts that 2025 will be the year that institutional investors will begin to incorporate more diversification in their crypto-investing strategies the same way they do in other asset classes like equities or bonds.

“You’re already seeing it broaden out actually. A lot of people were worried about the Ethereum ETFs for instance, which launched this summer and had tepid inflows.

But over the last month or so, you’ve seen billions of dollars flow into those products.

Again, the things that have happened in crypto in the past keep happening. Historically, most people enter crypto through Bitcoin, and then they discover Ethereum, and then they think about Solana. There’s no reason to assume that the institutions that came into Bitcoin won’t move on to other assets in the future.

In fact, I think in 2025, you’re going to see an explosion of interest in index space strategies that give diversified exposure to crypto. Of course, [that is] something we’ve been doing at Bitwise since 2017 when we pioneered that concept. I think 2025 is when that becomes a mainstream way to allocate to this space, the same way it is to stocks and bonds and real estate and everything else.”

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Bitcoin

Microsoft says ‘no’ to Bitcoin, corporates say ‘bring it on’

Published

21 hours ago

December 22, 2024

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Microsoft shareholders nixed a Bitcoin treasury idea, but other big-name companies disagree with this strategy. Here’s why.

Bitcoin (BTC) is often likened to “digital gold,” with its fixed supply of 21 million coins making it a potential hedge against currency devaluation and inflation.

And nowadays, Bitcoin’s unique characteristics make it an attractive addition to corporate treasuries. It can balance exposure to traditional assets like cash, stocks, and bonds.

Bitcoin is also one of the most liquid assets globally, and its historical performance has shown significant long-term value appreciation — it reached an all-time high of over $108,000 on Dec. 17.

But there’s no shortage of risks.

A board might avoid adopting a Bitcoin treasury due to the coin’s extreme price volatility, which can lead to substantial losses during downturns. Also, regulatory uncertainties pose potential threats as governments refine crypto policies. Additionally, liquidity challenges during market slumps can amplify price drops when offloading assets.

So it’s no wonder that, on Dec. 10, Microsoft’s board channeled the long-standing crypto skepticism of its co-founder, Bill Gates, and recommended ditching the proposa for a Bitcoin trasury. Gates himself has famously dismissed crypto as “100% based on greater fool theory” — ouch.

Bitcoin evangelist and MicroStrategy Chairman Michael Saylor was busy trying to woo Microsoft when he touted Bitcoin’s own meteoric returns and bragged about MicroStrategy’s stock soaring after their BTC splurge. His pitch? Bitcoin could boost Microsoft’s market cap while acting as a financial guardian angel.

Microsoft’s response? No, thanks.

Meanwhile, at least 10 other companies are embracing the MicroStrategy playbook.

Genius Group

Genius Group, an AI-powered education group, announced in November that it had completed the purchase of 110 Bitcoin for $10 million, at an average price of $90,932 per Bitcoin. The purchase made good on a promise to employ what it called a “Bitcoin-first” strategy where it planed to commit 90% or more of its current and future reserves to be held in Bitcoin, with an initial target of $120 million in Bitcoin.

Earlier this month, the company bolstered its Bitcoin treasury by acquiring 194 Bitcoin worth $18 million at an average price of $92,728 per Bitcoin.

Genius Group CEO Roger Hamilton credited Saylor’s Bitcoin treasury plan for the inspiration, adding that “more companies will see the benefits of establishing a Bitcoin treasury, and will be equipped with the clear steps to follow.”

Worksport

Worksport, a U.S.-based provider of pickup truck solutions, is adding cyptocurency to its corporate treasury strategy.

The Nasdaq-listed company announced on Dec. 5 that it would be adding Bitcoin (BTC) and XRP (XRP) to its treasury assets. This follows a resolution by the company’s board of directors, which approved an initial purchase of $5 million worth of BTC and XRP.

Worksport is committing 10% of its excess operational cash to this corporate pivot, it said in the announcement.

“Our upcoming adoption of Bitcoin (BTC) and XRP (Ripple) reflects our commitment to staying ahead of market trends while prioritizing operational efficiency and shareholder value. As we expand our product offerings and global reach, cryptocurrency has the potential to be a strong strategic complement,” Steven Rossi, chief executive officer of Worksport, said.

Amazon

Amazon shareholders, led by the National Center for Public Policy Research, are urging the Seattle-based company’s board to assess the potential benefits of adding Bitcoin to the company’s financial strategy.

The proposal, submitted on Dec. 6, aims to explore whether Bitcoin could protect and enhance shareholder value, especially amid persistent inflation and declining yields from traditional assets.

The National Center emphasizes Bitcoin’s robust performance—131% growth in the past year and 1,246% over five years—as evidence of its potential as an inflation hedge and a growth asset. The initiative also highlights concerns about the diminishing purchasing power of Amazon’s $88 billion cash reserves due to average inflation of 4.95% over the past four years.

This move represents a broader trend of shareholder proposals influencing corporate policies, leveraging shareholder rights to advocate for financial strategies that address economic risks and enhance long-term value.

MicroStrategy

Perhaps the most vocal of all Bitcoin fans is MicroStrategy’s Saylor who, as of this past week, increased the company’s total holdings to 439,000.

As a result, Saylor has officially strengthening MicroStrategy’s position as the top corporate BTC holder, considering it a long-term store of value.

Saylor, during an appearance on the Dec. 18 episode of the Open Interest show on Bloomberg Television, even voiced his willingness to advise President-elect Donald Trump on crafting a digital assets policy for the U.S.

But Saylor continues to draw scrutiny: Analyst Jacob King has labeled MicroStrategy’s Bitcoin-focused business model a “giant scam,” claiming it is unsustainable and destined for collapse.

MicroStrategy’s business model is a giant scam and relies on a reflexive loop: it issues debt or equity to buy BTC, which drives BTC’s price higher. This increases MSTR’s market cap, boosts its index weight, and attracts more sheep investors. With a higher valuation, it issues… pic.twitter.com/Owyi7mCHaO
— Jacob King (@JacobKinge) December 17, 2024

Marathon Digital Holdings

As one of the largest Bitcoin mining companies, Marathon owns 44,394 BTC. Its business model revolves entirely around mining and holding Bitcoin as part of its assets.

Back in July, the company confirmed it will adopt “a full HODL approach” towards its Bitcoin treasury policy, retaining all that it mines within its operations, in addition to its open market purchases.

“Adopting a full HODL strategy reflects our confidence in the long-term value of bitcoin,” CEO Fred Thiel stated. “We believe bitcoin is the world’s best treasury reserve asset and support the idea of sovereign wealth funds holding it. We encourage governments and corporations to all hold bitcoin as a reserve asset.”

Tesla

Tesla initially bought $1.5 billion worth of Bitcoin in 2021 and currently holds 9,720 BTC. While the Elon Musk-led company remains a significant corporate holder.

BitcoinTreasuries data shows that Tesla is the fourth-largest holder of Bitcoin among U.S. public companies with crypto treasuries (MicroStrategy, MARA Holdings and Riot Platforms are believed to hold more).

In October, the electric vehicle company reportedly moved $765 million worth of Bitcoin to unidentified wallets.

Coinbase

The cryptocurrency exchange holds 9,480 BTC as part of its reserves, leveraging its position as a major player in the digital asset ecosystem.

The Brian Armstrong-led firm holds large amounts of Bitcoin as an exchange and converter. It’s also a trusted institution for custody services, and counts the Bitcoin ETF coterie of BlackRock, Grayscale, 21Shares, Invesco, Valkyrie, Wisdom Tree and Franklin Templeton among its clients.

Therefore, Coinbase has a Bitcoin treasury for itself and oversees others.

Hut 8 Mining Corp

On Thursday, crypto.news reported that Hut 8, a Bitcoin mining company, added 990 Bitcoin to its reserves.

The company spent roughly $100 million to increase its total holdings to 10,096 BTC. The reserve, now valued at over $1 billion, places Hut 8 among the largest corporate Bitcoin holders globally.

The company, under the guidance of CEO Asher Genoot, purchased the coins at an average price of $101,710, significantly higher than its cumulative acquisition cost of $24,484 per Bitcoin.

Block Inc.

The startup (formerly Square) holds 8,027 BTC as part of its strategy to integrate Bitcoin into mainstream finance.

The Jack Dorsey-founded company is so bullish on Bitcoin that, last month, it confirmed a company-wide pivot towards the cryptocurrency mining sector.

Block decided to dial down resources towards music streaming service TIDAL, and sunset TBD, a venture focusing on decentralizing the internet, to focus on expanding its presence in the Bitcoin mining sector.

Block acquired TIDAL in a 2021 acquisition for roughly $300 million. The platform has continued to struggle, with reports indicating workforce reductions and a $132.3 million impairment charge.

OneMedNet

OneMedNet Corp., as of Nov. 12, owns some 34 Bitcoins.

Off The Chain Capital, an investor in OneMedNet, was also inspired by Saylor, betting that Bitcoin isn’t just a hedge but a springboard for its healthcare data innovation.

Aaron Green, the company’s CEO, stated, “By continuing to invest a portion of our assets into Bitcoin, we aim to not only safeguard our financial stability but also fuel the ongoing development and innovation within our iRWD platform.”

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Bitcoin

Why $99,800 Is An Important Resistance To Break

Published

22 hours ago

December 21, 2024

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Este artículo también está disponible en español.

The Bitcoin price is approaching the $100,000 level again after experiencing significant declines these past weeks. A crypto analyst has pointed out that the critical resistance level at $99,800 is crucial for Bitcoin’s next move. If the pioneer cryptocurrency can break through this level, it could trigger a significant breakout, potentially propelling Bitcoin past the $100,000 mark.

Bitcoin Price Faces Resistance At $99,800

Prominent crypto analyst Ali Martinez has shared a chart showing an In/Out of the Money Around Price (IOMAP) analysis of the distribution of Bitcoin wallets based on their purchase price. According to the analyst, the Bitcoin price is facing extreme resistance between the $97,500 and $99,800 price levels as it tries to breach $100,000 again.

Martinez noted that around this price range, approximately 923,890 wallet addresses had purchased over 1.19 million BTC. This price zone acts as an important resistance level because many Bitcoin holders may look to sell and break even, potentially exerting selling pressure.

In the IOMAP chart shared by Martinez, the green dots that signal ‘In the Money’ represent price levels below the current Bitcoin price, where wallet holders are in profit because they bought BTC at a lower value. On the other hand, the red dots that represent ‘Out of the Money’ show price levels of Bitcoin’s present value, where wallet holders are at a loss because they bought BTC at a higher price.

BTCUSD trading at $97,429 on the daily chart: TradingView.com

Lastly, the white dot indicates ‘At the Money’ and represents the current price of Bitcoin at an average of $98,676, where some crypto wallets see neither profit nor loss.

Below Bitcoin’s current price, the chart shows strong buying zones, which could provide strong support if the pioneer cryptocurrency experiences a potential pullback. Martinez has forecasted that breaking through the critical resistance range between $97,500 and $99,800 would signal the start of a bullish rally for Bitcoin, potentially leading it to a new all-time high.

Currently, the Bitcoin price is trading at $98,652, steadily rising to return to previous highs above $100,000. To a new all-time high, Bitcoin will have to surge by over 7%, surpassing its present ATH above $104,000.

Bitcoin’s Biggest Gains To Come After Christmas

A popular crypto analyst identified as the ‘Crypto Rover’ has expressed optimism about Bitcoin’s near-term price potential this Q4. According to the analyst, Bitcoin has historically experienced its most significant gains right after Christmas during the halving years.

The analyst shared a price chart showing Bitcoin’s market performance during each halving cycle. In the 2012 halving year, Bitcoin started a significant price rally, which extended into the following year. The same bullish trend occurred in the next halving years in 2016 and 2020, with Bitcoin hitting exponential price highs.

Based on this historical trend, Crypto Rover projects that Bitcoin could witness a similar bullish surge before the end of 2024, with the rally potentially continuing into 2025.

Featured image from Bloomberg Images, chart from TradingView

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