The Smartest Way to Build a Diversified Cryptocurrency Portfolio
Key Points
BITW is a simple way to profit from the long-term growth of the crypto market.
It’s constantly screened and re-balanced to weed out the weaker tokens.
- 10 stocks we like better than Bitwise 10 Crypto Index ETF ›
Cryptocurrencies are notoriously volatile investments, but you can reduce that volatility by spreading your cash across multiple tokens. Instead of doing that by yourself, it's smarter to invest in a diversified exchange-traded fund (ETF) like the Bitwise 10 Crypto Index Fund ETF (NYSEMKT: BITW).
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What does the Bitwise 10 Crypto ETF actually own?
BITW tracks the market's ten largest cryptocurrencies by market cap, and rebalances those holdings monthly to reflect their fluctuating values. It's monitored daily and uses built-in screens to remove assets that face "certain technical, custody, liquidity, and regulatory risks". The fund has $723 million in assets under management, and it charges a sponsor fee of 0.75%.
As of this writing, BITW's top four holdings are Bitcoin (CRYPTO: BTC) (77.2% of its portfolio), Ethereum (CRYPTO: ETH) (14.3%), XRP (CRYPTO: XRP) (4.4%), and Solana (CRYPTO: SOL) (2.5%). None of its remaining six tokens account for more than 1% of its portfolio. Coinbase's Custody Trust serves as its custodian for those digital assets.
BITW only trades slightly above its net asset value (NAV) of $47.66 per share, and it's stayed roughly flat over the past 12 months as many smaller cryptocurrencies crumbled. While BITW might underperform some of the market's hottest cryptocurrencies, it provides a simple, well-balanced way to profit from the crypto sector's expansion without taking on too much risk.
Should you buy stock in Bitwise 10 Crypto Index ETF right now?
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
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