Morgan Creek Digital Assets and Bitwise Asset Management, two well-known cryptocurrency hedge funds, have launched the Digital Asset Index Fund to give institutional investors a safe, regulated and efficient way of investing in the crypto markets.
An index fund like this provides a better alternative to exchange-traded funds (ETFs), especially since it is backed by actual cryptocurrency and, therefore, directly impacts spot crypto demand. The launch illustrates how crypto hedge funds can provide the infrastructure institutional investors need amid the rapid growth in the number of hedge funds to 466. Some believe this is far more important than the approval of a Bitcoin ETF in the US.
The Digital Asset Index Fund covers 75% of the crypto markets, according to market cap and includes Bitcoin, Ethereum, Bitcoin Cash, EOS, Litecoin, Dash, Zcash, Monero, Ethereum Classic and OmiseGo. Some 85% of the fund consists of Bitcoin and Ethereum, essentially bulking up with main cryptocurrencies with some slight diversification into others. The weighting for each crypto in the index fund is re-calculated every month to account for changes in market caps.
Ripple is specifically excluded from the Digital Asset Index Fund because Ripple Labs and the Ripple Foundation control more than half of its supply. The token is often excluded from crypto rankings due to this but when included, it is third in the ranks with a market cap of USD 14 billion. Stellar isn’t included in this index fund either, although the reasons for that are unclear.
This Digital Asset Index Fund is similar to the Coinbase Index Fund which launched in June 2018. The latter includes fewer cryptocurrencies, however, with only Bitcoin, Litecoin, Ethereum, Bitcoin Cash and Ethereum Classic being accounted for. The Coinbase Index Fund requires a minimum investment of USD 250,000, while Bitwise’s minimum investment is a relatively smaller USD 50,000. Both index funds require investors to be accredited in the US.
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