A new frontier? Bitwise launches unique NFT index fund

Posted: 17 December 2021 4:47 pm
News

Crypto asset manager Bitwise has launched the world’s first index fund which tracks the 10 largest non-fungible tokens (NFTs). Is this the new frontier for NFT investing?

NFTs have become an emerging market trend, attracting a new breed of investors over the past year. Bitwise has decided to capitalise on this momentum by launching the Bitwise Blue-Chip NFT Index Fund.

The idea is that the fund will purchase and hold in custody NFTs from CryptoPunks, Bored Ape Yacht Club, Mutant Ape Yacht Club, Autoglphs, Fidenza, VeeFriends, CyberKongz, Genesis, Cool Cats, Meebits and Chromie Squiggle.

So how does it work? And who can access this new form of investing?

How does the Bitwise Blue-Chip NFT Index Fund work?

The Bitwise Blue-Chip NFT Index Fund will purchase and hold customers’ NFTs from the most valuable NFT collections. This is based on their market capitalisation using “floor prices”. This is essentially the price at which an investor can buy or sell the lowest-price NFT in any given collection. The fund will be rebalanced every 3 months.

According to Bitwise CIO Matt Hougan, the fund will focus its holding on art and collectibles. It will also exclude NFTs from collections with fewer than 100 items, as Bitwise views those assets as too illiquid.

Who can invest?

Investments can only be made by accredited US investors via private placement. The fund’s minimum investment is $25,000 (£18,805.38), which is reportedly lower than many blue-chip NFTs. So there are big barriers to entry for the average investor.

Will it change NFT investing?

The world of NFT investing is new and largely untested. It is easy to get scammed by it and it’s hard to keep up with its complexities. The emphasis behind the Bitwise Blue-Chip NFT Index Fund is to “make owning the blue-chip NFTs emerging in this historic new chapter simpler”, according to Hougan.

Bitwise is looking to provide investors with the opportunity to get involved with NFTs, without having to shoulder the cost, time and complexity of sourcing and buying individual NFTs.

But it will remain to be seen as to whether there is a demand for this type of investing in the NFT space. And whether or not other asset managers will follow suit.

Cryptocurrencies aren't regulated in the UK and there's no protection from the Financial Ombudsman or the Financial Services Compensation Scheme. Your capital is at risk. Capital gains tax on profits may apply.

Cryptocurrencies are speculative and investing in them involves significant risks - they're highly volatile, vulnerable to hacking and sensitive to secondary activity. The value of investments can fall as well as rise and you may get back less than you invested. Past performance is no guarantee of future results. This content shouldn't be interpreted as a recommendation to invest. Before you invest, you should get advice and decide whether the potential return outweighs the risks. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site