Crypto fund manager Bitwise raises $70m
14:47, 15 June 2021
San Francisco-based Bitwise Asset Management, the world’s largest cryptocurrency index fund manager, has raised $70m in a Series B funding round led by tech investor Elad Gil and crypto venture fund Electric Capital.
Bitwise also managed to draw new backers, including Daniel Loeb’s Third Point, Daniel Och’s Willoughby Capital, Louis Bacon’s Moore Strategic Ventures, Paul Eisenstein’s Vetamer Capital, Coinbase Ventures, and top tech and finance executives who participated as individual investors.
Bitwise’s funding round comes as the new cryptocurrency market boom, which started last year and continued in the first quarter of 2021, has opened the institutional investors’ appetite for digital assets. With inflationary pressures mounting and large central banks around the world still printing money to fuel economic growth, investors increasingly see bitcoin and other cryptos as a long-term value story.
Bitwise looks to cement its market leader position
Bitwise, which has reached a valuation of $500m, says it will use the money to consolidate its position as the go-to crypto partner for professional investors.
“Five years from now, while some investors will still be trading crypto portfolios themselves, many long-term investors will want to rely on the same financial advisors, processes and brokerages they use for every other asset class,” Bitwise CEO Hunter Horsley said in a press release.
His backers expect the company to deliver on its promise.
“Bitwise has established itself as the market leader among financial advisors and has tremendous momentum,” said Elad Gil. “We believe that their best-of-breed crypto investment solutions, education and client service set them up to be the premier player in what they do.”
“Crypto is an exciting category with a lot of promise but also unique challenges. Bitwise is the best at what they do, and essential for many professionals to be comfortable participating in this growing space,” added Henry Kravis, co-founder of private equity firm KKR, who also joined the funding round.
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Fast growth fuelled by crypto boom
The funding round follows several recent milestones for Bitwise. The company’s assets under management went up 20 times in the last year, rising to over $1.2bn at the end of the first quarter.
Bitwise says over 200 financial advisory firms currently use its products and research to help clients access the cryptocurrency asset class. The company has already doubled the size of its research, client service and sales teams since the start of the year, and plans to double them again by year-end.
Bitwise has also continued to develop its product suite this year. In February, the company launched the world’s first DeFi index fund, the Bitwise DeFi Crypto Index Fund. That was followed in May by the Bitwise Crypto Industry Innovators ETF (NYSE: BITQ), the first crypto industry ETF, which tracks the Bitwise Crypto Innovators 30 Index of pure-play crypto equities.
These new funds join the flagship Bitwise 10 Crypto Index Fund (OTCQX: BITW), the world’s largest crypto index fund, as well as the Bitwise Bitcoin Fund, the Bitwise Ethereum Fund and other products.
With the additional funding, Bitwise plans to introduce new and innovative products, enabling investors to access a wide range of crypto opportunities.
A hot industry
The crypto financial services industry’s potential comes from professional investors' increasing interest in cryptocurrencies.
For example, hedge fund managers plan to increase their exposure to cryptocurrencies to over 7% of their assets, a survey conducted by fund administrator Intertrust and quoted by the FT recently showed. Intertrust estimates that this could translate into about $312bn of assets in cryptos, based on data group Preqin’s forecast for the total size of the hedge fund industry.
Several high-profile hedge fund managers expressed their preference for cryptos recently, including Ray Dalio, who said he’d rather have bitcoin than bonds in an inflationary scenario, and Paul Tudor Jones, who told CNBC that he wants to invest 5% of his assets in bitcoin.
The price of bitcoin returned above the $40,000 level on 14 June, but it’s still about 38% under the all-time high that was reached in mid-April. Year on year, bitcoin is up more than fourfold.
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