Bitwise debuts Avalanche ETP offering AVAX exposure and yield

The product is designed to generate yield by participating in network validation, adding an income component to passive exposure.

Bitwise Asset Management has launched a spot Avalanche exchange-traded product, giving investors exposure to the Avalanche token while staking a portion of its holdings to generate yield.

Bitwise plans to stake roughly 70% of its AVAX holdings through its in-house infrastructure, while maintaining a liquidity reserve of about 30% to meet redemptions and operational needs.

The fund began trading Wednesday on the NYSE under the ticker BAVA, closing up about 1.5%, to $25.50 per share, according to Yahoo Finance. The Avalanche token (AVAX) was last trading at $9.52, up 1.8%, according to CoinMarketCap.

According to Wednesday’s announcement, the product carries a sponsor fee of 0.34%, with a temporary waiver to 0% for the first month on the first $500 million in assets, and is structured to distribute net investment income, including staking rewards, to shareholders periodically.

The fund holds AVAX directly and uses an in-house staking unit, Bitwise Onchain Solutions, to participate in network validation and earn rewards, which are paid in additional tokens. Avalanche staking rewards were about 5.4% as of mid-April, according to the announcement.

Avalanche is a Layer-1 blockchain built for high throughput and low latency. It is used across tokenization and enterprise pilots, including initiatives tied to FIFA, state-level stablecoin efforts in Wyoming, and projects from companies such as Toyota and asset managers including BlackRock.

The new fund is the latest Avalanche fund development in recent weeks. Nasdaq last week filed with the US Securities and Exchange Commission (SEC) to list shares of the VanEck Avalanche Trust, a proposed ETF designed to provide exposure to AVAX under rules governing commodity-based trust shares.

Related: CME Group expands crypto futures with Avalanche and Sui contracts

The launch of Bitwise’s Avalanche ETF comes as exchange-traded crypto products and publicly traded companies continue to accumulate a growing share of Bitcoin’s (BTC) circulating supply.

According to data from BitBO.io, Bitcoin ETFs hold more than 1.29 million BTC, or just over 6% of circulating supply. Public companies hold an additional 1.17 million BTC on their balance sheets, based on figures from BitcoinTreasuries.NET. Combined, ETFs and corporate holders now account for around 12% of Bitcoin’s circulating supply.

Among ETFs, accumulation is led by BlackRock’s iShares Bitcoin Trust, which holds about 791,000 BTC, or roughly 3.8% of total supply, followed by Grayscale’s Bitcoin Trust with around 153,600 BTC, or about 0.7%.

Beyond asset managers, banks are also entering the market. Earlier this month, the Morgan Stanley Bitcoin Trust (MSBT), the first spot Bitcoin ETF offered by a US bank, recorded $30.6 million in inflows on its trading debut and generated about $34 million in first-day volume.

On Tuesday, Goldman Sachs filed with the SEC to launch a Bitcoin-linked exchange-traded fund designed to generate income while limiting exposure to the cryptocurrency’s volatility. The proposed fund would invest in Bitcoin ETPs and sell call options to generate income while limiting exposure to price swings.

Among public companies, Strategy, the first Bitcoin treasury company, chaired by Michael Saylor, holds 780,897 Bitcoin, or around 4% of the total supply. 

Governments also collectively hold around 3% of circulating Bitcoin, with around 649,870 BTC on their balance sheets. The United States is the largest holder with about 328,000 BTC, followed by China with roughly 190,000 BTC and the United Kingdom with more than 61,000 BTC.

Bitcoin’s price has fallen from its high of around $126,000 in October, and is trading around $75,100, per CoinGecko data.

Magazine: Bitcoin will not hit $1M by 2030, says veteran trader Peter Brandt

Source: CoinTelegraph