Hybrid Bitcoin and Ethereum ETF Proposed by Hashdex
Hashdex, a Brazilian cryptocurrency asset manager, plans to launch a hybrid spot exchange-traded fund (ETF). This ETF will provide investors with combined exposure to Bitcoin and Ethereum.
What is an ETF?
An ETF (Exchange-Traded Fund) is like a basket that contains different types of investments. Instead of buying individual stocks or cryptocurrencies, you can buy a share in an ETF, which gives you a piece of all the investments in that basket. Hashdex's ETF will make it easier to invest in Bitcoin and Ethereum without needing to buy and manage the cryptocurrencies directly.
How Hashdex's ETF Will Work
Hashdex plans to use at least two custodians (companies that hold investments for safekeeping) for the ETF: BitGo and Coinbase. This makes the ETF more secure and reliable.
The ETF will be capitalization-weighted:
- Bitcoin (BTC) will make up 70.54% of the portfolio.
- The rest will be Ethereum (ETH).
The weights will be adjusted quarterly to reflect market changes.
Future Plans
Hashdex could also add other digital currencies to the ETF in the future, but these changes must be approved by the SEC (U.S. Securities and Exchange Commission).
- In Brazil, Hashdex's crypto index ETF includes:
- Solana (SOL)
- XRP
- Cardano (ADA)
- Litecoin (LTC)
- Polygon (MATIC)
- Along with Bitcoin and Ethereum.
Expert Opinions
James Seyffart, an analyst from Bloomberg Intelligence, thinks bringing such a product to the U.S. makes sense. He said it's useful for people who believe digital assets have broader uses than just Bitcoin. This type of ETF can help advisors who want a diversified exposure to the cryptocurrency space.
What's Next?
Earlier this year, Hashdex withdrew their proposal for an ETF that combined futures-based Ether contracts and spot-based Ether. The approval deadline for the new proposal might be around March 2025.
By using the simple basket analogy and breaking down the complex financial concepts, even someone with no financial background, like a housewife, can understand how Hashdex's proposed ETF works and why it might be beneficial.
