In a major win for the company, Bitwise Asset Management announced that Ric Edelman, founder of Edelman Financial Services, has invested in and become an advisor to the firm. Bitwise launched the world’s first cryptocurrency index fund last year and has also filed for a bitcoin ETF. Edelman Financial Services is among the largest independent financial advisory firms in the country and has been ranked the country’s number one independent advisor three times by Barron’s magazine.
Since the launch of its index fund, Bitwise has established an advisor and investor roster of well-known names from the financial services industry. This list includes former Barclays Global Investors CFO Alison Smith and former Global Head of Bloomberg Indexes and former Global head of R&D for S&P Srikant Dash. It also announced the launch of a token tied to its index fund recently.
Edelman’s interest in Bitwise is as much about investment as about educating advisors about a new asset class. “There is a technological and financial revolution taking place with cryptocurrencies that has far-reaching implications,” he stated. “Every financial advisor needs to educate themselves about this space, and most should be considering an allocation for clients.”
Bitwise CEO Hunter Horsley said the firm currently spends 70% of its time educating clients, advisors, and investment committees about cryptocurrencies. For example, it published a research report to make the case for cryptocurrency investing earlier this year. “Ric is an amazing resource in as we work to equip the advisor community to navigate the crypto space,” he explained.
A Shift In Client Mix
The addition of prominent names to Bitwise’s advisory board has corresponded with a downturn in cryptocurrency markets and a change in its client mix. After a surge at the end of 2017, cryptocurrency markets have been in a prolonged swoon since the start of this year.
Based on statistics from coinmarketcap.com, the overall valuation of cryptocurrency markets has crashed from a high of $813 billion during the first week of this year to $219 billion (as of this writing). Even as individual traders liquidated their holdings and exited the market, institutional investors, who had been watching from the sidelines, have begun to warm up to cryptocurrencies.
At Bitwise, 2% of the firm’s clients redeemed their holdings while 25% increased their investment amounts. “In the bear market of 2018, many individuals are feeling a bit burned while institutions have increasingly developed their views and like the idea of making their allocation at a lower cost basis,” said Horsley.
According to him, the decline in valuations has provided institutional investors with an opportunity to develop an investment thesis for cryptocurrencies. “The (client) mix has shifted a bit from individuals to advisors and institutions, with which we’ve seen a significant pickup in interest,” he said.