Bitwise Bitcoin Fund raises $9 million from inflation-wary investors

Crypto asset management firm Bitwise has raised about $9 million for its bitcoin fund over the last one year.

The detail was revealed in a regulatory form filed with the U.S. Securities and Exchange Commission last week. Forty-three investors contributed to the amount, with a minimum investment being $3,950.

Bitwise’s head of research, Matthew Hougan, told The Block that the form was filed as the company changed the name of the fund from "Bitwise Bitcoin Fund, LLC" to "Bitwise Bitcoin Fund." The fund is open for investments every week, similar to traditional mutual funds, and hence the amount is since Bitwise's last filing in December 2019, said Hougan. 

Bitwise Bitcoin Fund was first launched in December 2018 and had raised only about $153,400 at the time. Last year, the fund raised $4.1 million. The latest increase in the amount is from investors looking for a hedge against inflation, Bitwise’s head of research, Matthew Hougan, told CoinDesk.

Giving further details, Hougan told The Block that Bitwise's products are exclusively focused on financial advisors, "and something has changed in the financial advisory market in the past year."

"A year ago, advisors were mostly interested in learning about crypto; now, they're actually starting to invest. A year ago, advisors were making small personal investments in our funds; now they're allocating 1%, 2%, or more across all of their client portfolios," said Hougan. "A year ago, advisors were worried about headline risk when investing in crypto and didn't want to stick their neck out and be first; now, they're more worried about falling behind their peers and appearing out-of-touch with clients."

"That last change has been really meaningful," said Hougan. "Advisors increasingly feel they have to be prepared to talk to clients about crypto. Part of that is driven by recent returns, part is driven by the rising institutionalization of the space (Fidelity, CME, etc.), and part is driven by macroeconomic conditions. We're still early in this transition, but it's maturing fast. I think you'll see flows from this space really ramp up in the next 12 months."

Bitwise also offers an Ethereum fund and a crypto index fund. The Ethereum fund raised only about $29,700 last year, while the index fund raised about $66.5 million as of June this year.

Bitwise rival Grayscale, on the other hand, manages $5.8 billion worth of assets across its funds.

This story has been updated to include comments from Bitwise’s head of research, Matthew Hougan.