Bitwise Asset Management has announced that its crypto index trades sold for a much higher premium than the underlying assets they represent. This is coming as Bitcoin blew past the $20k benchmark, giving way for FOMO to set in.
The crypto index fund saw an initial trading volume rise to 369%; a premium that is higher than the value of Bitcoin, Ethereum, and eight other crypto assets that are being held in the fund.
According to its website, BITW provides a secure way for investors to diversify their portfolios to include bitcoin and other leading digital assets.
The fund seeks to hold the 10 most highly valued cryptocurrencies, screened & monitored for certain risks, weighted by market capitalization, and rebalanced monthly.
According to Bloomberg, the remarkable performance suggests that players in the crypto space such as institutional investors and hedge funds are happy to pay a premium to access these assets through a brokerage rather than buying them directly. However, Kyle Samani, co-founder and managing partner at Multicoin Capital believes that several of these investors are acting in ignorance. He said:
I don’t think they can justify the premium, I just think they don’t know what they’re buying. That’s not justifiable, that’s just ignorance.
He added that people are looking for a reasonably constructed index without fully understanding what it entails.