Correspondence 0001213900-24-102567 from Bitwise Funds Trust (CIK 0001928561)
Bitwise Funds Trust (CIK 0001928561)
Date: Nov. 26, 2024 · CIK: 0001928561 · Accession: 0001213900-24-102567
AI Filing Summary & Sentiment
File numbers found in text: 333-264900, 811-23801
Letter
VIA EDGAR CORRESPONDENCE United States Securities and Exchange Commission Division of Investment Management 100 F Street, N.E. Washington, D.C. 20549 Re: Bitwise Funds Trust File Nos. 333-264900; 811-23801
Dear Ms. McHugh:
This letter responds to your comments delivered telephonically regarding the registration statements filed on Form N-1A for Bitwise Funds Trust (the “Registrant”) with the staff of the Securities and Exchange Commission (the “Staff”) on October 4, 2024 (the “Registration Statement”). The Registration Statement relates to Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF (formerly, Bitwise Bitcoin Optimum Roll Strategy ETF), Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF (formerly, Bitwise Ethereum Strategy ETF) and Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF (formerly, Bitwise Bitcoin and Ether Equal Weight Strategy ETF) (the “Funds”), each a series of the Registrant. Capitalized terms used herein, but not otherwise defined, have the meanings ascribed to them in the Registration Statement.
Comment 1 – Fees and Expenses of the Fund
Please provide the Staff a completed fee table for each of the Funds at least five days prior to the effectiveness of the Registration Statements.
Response to Comment 1
Pursuant to the Staff’s comment, prospectuses for each Fund containing completed fee tables have been sent to the Staff under separate cover.
Comment 2 – Fees and Expenses of the Fund
The Staff notes the disclosure set forth in the footnote to the table entitled “Annual Fund Operating Expenses” regarding the fee waiver. If fees previously waived pursuant to this agreement may be recouped by the Adviser, please disclose as such in this footnote. Additionally, if the fee waiver agreement can be terminated, please indicate who can terminate it and under what circumstances. Lastly, please ensure that the term of the fee waiver agreement extends at least one year from the effective date of the Registration Statement.
Response to Comment 2
The Registrant confirms that fees previously waived pursuant to the fee waiver agreement may not be recouped by the Adviser. Additionally, the referenced footnote has been revised as set forth below.
(1) The Fund’s investment adviser has contractually agreed to waive its advisory fees and/or assume as its own expense certain expenses otherwise payable by the Fund to the extent necessary to ensure that total annual fund operating expenses do not exceed 0.85% of average daily net assets until May 1, 2027. This Agreement may be terminated by the Trust, on behalf of the Fund, at any time and by the Fund’s investment adviser after May 1, 2027 upon sixty (60) days’ written notice to the Fund.
Comment 3 – Portfolio Turnover Rate
Please confirm that the currently disclosed portfolio turnover rate of 0% is accurate.
Response to Comment 3
The Registrant so confirms.
Comment 4 – Principal Investment Strategies
Please confirm supplementally that a Fund will have either 100% exposure to bitcoin, ether or bitcoin and ether (as applicable), or 100% exposure to U.S. Treasury securities.
Response to Comment 4
The Registrant confirms that each Fund will have either a 100% exposure to the digital asset(s) indicated in its strategy (be that bitcoin, ether, or bitcoin and ether) or a 100% exposure to U.S. Treasury securities.
Comment 5 – Principal Investment Strategies
The Staff notes the Fund’s 80% investment strategy set forth below.
Under normal market conditions, the Fund will invest at least 80% of its assets in Bitcoin Futures Contracts and U.S. Treasury securities.
Please consider whether it would be more appropriate to replace “and” with “or” given that the Fund will have either 100% exposure to Bitcoin Futures Contracts or 100% exposure to U.S. Treasury securities.
Response to Comment 5
The Registrant acknowledges the substance and merit of the Staff’s comment. However, due to the mechanism of the strategy and the leverage inherent in futures contracts, even when the Fund has a 100% notional allocation to Bitcoin Futures Contracts, it will still have 75% of its assets invested in U.S. Treasury securities. Accordingly, it has determined that to say that the Fund will be invested in Bitcoin Futures Contracts or U.S. Treasury securities is inescapably misleading. Accordingly, with the utmost respect, the Registrant declines to revise the strategy as it feels its current articulation most accurately reflects the Fund’s holdings.
Comment 6 – Principal Investment Strategies
The Staff notes the following disclosure set forth in the second paragraph of the section entitled “Principal Investment Strategies.”
The Fund utilizes a “long-flat” trend-following investing strategy pursuant to which the Adviser rotates the Fund’s exposure between 100% exposure to Bitcoin Futures Contracts and 100% exposure to U.S. Treasury securities, based upon a proprietary signal that is based upon bitcoin’s 10-day and 20-day exponential moving average price.
Please revise to include more disclosure about the meaning of a “long-flat trend-following investing strategy.” Please also provide additional detail regarding the proprietary signal.
Response to Comment 6
Pursuant to the Staff’s comment, the referenced disclosure has been revised as set forth below.
The Fund utilizes a “long-flat” trend-following investing strategy pursuant to which the Adviser rotates the Fund’s exposure between 100% exposure to Bitcoin Futures Contracts and 100% exposure to U.S. Treasury securities. A long-flat strategy, like the one utilized by the Fund, takes a long position when a trend is detected, seeking to take advantage of an anticipated increase in an asset’s value. However, when a downward trend is detected, instead of shorting the downtrend, the strategy exits the position and remains in cash or cash equivalents. The Fund’s strategy is based upon a proprietary signal that is based upon an observation and comparison of bitcoin’s 10-day and 20-day exponential moving average price. An exponential moving average applies a weighting factor to each price point, giving exponentially more weight to recent data, making it a useful tool for identifying trends as it is more responsive to new price changes and trends. This signal is completely quantitative in nature.
Comment 7 – Principal Investment Strategies
The Staff notes the following disclosure set forth in the section entitled “Principal Investment Strategies.”
Due to the nature of the Fund’s trend-following investment strategy, there will be periods – and perhaps extended periods – when the Fund has no exposure to Bitcoin Futures Contracts, as the entirety of its assets will be invested in U.S. Treasury securities.
Please define what the Fund means by “extended periods.”
Response to Comment 7
The Registrant is unable to provide a specific definition for “extended periods” because it is inherently unknowable. The Fund’s strategy is based upon a purely quantitative signal that is based upon the price performance of bitcoin in the future. This disclosure is included to put investors on notice that depending on the future price performance of bitcoin, there could be very long periods when the Fund is not allocated to Bitcoin Futures Contracts.
Comment 8 – Principal Investment Strategies
The Staff notes the following disclosure set forth in the section entitled “Principal Investment Strategies”:
Due to the high margin requirements that are unique to Bitcoin Futures Contracts and certain tests that must be met in order to qualify as a registered investment company (“RIC”), the Fund may also utilize reverse repurchase agreements during certain times of the year to help maintain the desired level of exposure to Bitcoin Futures Contracts.
Please revise to include disclosure articulating reverse repurchase agreements constitute a form of borrowing.
Response to Comment 8
Pursuant to the Staff’s comment, the following sentence has been added to the end of the referenced disclosure.
The use of reverse repurchase agreements constitutes a form of borrowing.
Comment 9 – Principal Investment Strategies
The Staff notes that disclosure set forth in the fourth paragraph of the section entitled “Principal Investment Strategies” regarding the Fund’s use of swaps. Please revise to include disclosure that such swaps are cash-settled, uncleared and non-exchange traded. Additionally, please explain why it’s necessary to use swap agreements when bitcoin futures contracts are not trading.
Response to Comment 9
Pursuant to the Staff’s comment, the referenced disclosure has been revised to include the following:
To the extent the Fund utilizes swap agreements, such instruments will be cash-settled uncleared and non-exchange traded.
The Fund primarily anticipates utilizing swap agreements to provide exposure to the price of bitcoin over periods of time, such as weekends, when Bitcoin Futures Contracts are not trading. This will help the Fund track the price of bitcoin more precisely.
Comment 10 – General
The Staff notes that disclosure set forth in Item 4 is identical to the disclosure set forth in Item 9. Please consider disclosure that may be removed from Item 4 as it is more appropriately included in Item 9.
Response to Comment 10
Pursuant to the Staff’s comment, certain disclosure has been removed from Item 4.
Comment 12 – Principal Risks
The Staff notes the following risk disclosure set forth in the section entitled “Principal Risks.”
Trend-Following Investing Risk. The Fund employs a “trend-following” style of investing. Market trends can change quickly and while positive price movement in bitcoin may cause the Fund to allocate its exposure to Bitcoin Futures Contracts, that trend may not continue. In addition, there may be periods when the trend-following style of investing is out of favor and the investment performance of the Fund may suffer.
Please consider revising this risk disclosure to indicate that when the Fund is allocated to U.S. Treasury securities, it may miss out on positive price movements in bitcoin.
Response to Comment 11
Pursuant to the Staff’s comment, the referenced disclosure has been revised as set forth below.
Trend-Following Investing Risk. The Fund employs a “trend-following” style of investing based upon bitcoin’s 10-day and 20-day exponential moving average price. The price movement of bitcoin, has been, and may continue to be, driven largely by speculation and thus may not track the underlying health and performance of the Bitcoin blockchain and its protocol in terms of hash rate, active addresses, transaction volume, etc. Any disconnect between the trading price of bitcoin and the fundamentals of the Bitcoin blockchain and its protocol may cause the Fund to miss key underlying trends and thus may ultimately impair its ability to enhance risk-adjusted returns and decrease the downside risk associated with investments in bitcoin-linked instruments. Additionally, bitcoin price trends can change quickly and while positive price movement in bitcoin may cause the Fund to allocate its exposure to Bitcoin Futures Contracts, that positive trend may not continue and Bitcoin Futures Contracts could experience more volatility than the market as a whole. Conversely, negative price movement in bitcoin may cause the Fund to allocate its exposure to U.S. Treasury securities and the Fund may miss out on gains experienced by bitcoin prior to the Fund’s exposure switching back to Bitcoin Futures Contracts. In addition, there may be periods when the trend-following style of investing is out of favor and the investment performance of the Fund may suffer.
Comment 12 – Financial Highlights
Please provide the Staff a prospectus for each of the Funds containing completed financial highlights at least five days prior to the effectiveness of the Registration Statement.
Response to Comment 12
Pursuant to the Staff’s comment, prospectuses for each Fund containing completed fee tables have been sent to the Staff under separate cover.
Comment 13 – Statement of Additional Information
Please provide the Staff a statement for each of the Funds containing completed “Principal Holders” tables at least five days prior to the effectiveness of the Registration Statement.
Response to Comment 13
Pursuant to the Staff’s comment, statements of additional information for each Fund containing completed “Principal Holders” tables have been sent to the Staff under separate cover.
Comment 14 – Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF
Please revise the disclosure to make clear that the Ether Futures Contracts held by the Fund are priced based upon the New York Variant of the CME CF Ether-Dollar Reference Rate.
Response to Comment 14
Pursuant to the Staff’s comment, the disclosure has been revised accordingly.
Comment 15 – Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF
The Staff notes that the website for the Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF indicates that the Fund has an inception date of September 29, 2023. However, the Fund’s prospectus indicates that the Fund’s portfolio managers have been managing the Fund since October 2023. Please reconcile.
Response to Comment 15
The disparity relates to the fact that while the Fund went effective on September 29, 2023, it did not commence operations until October. However, to avoid confusion, the references to an inception date of October 2023 have been revised to September 2023.
Comment 16 – Statement of Additional Information
Please provide the Staff a statement for each of the Funds containing completed “Principal Holders” tables at least five days prior to the effectiveness of the Registration Statement.
Response to Comment 16
Pursuant to the Staff’s comment, statements of additional information for each Fund containing completed “Principal Holders” tables have been sent to the Staff under separate cover.
Comment 17 – Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF
Please define the 10-day and 20-day “exponential moving average price” and clarify here and/or in the corresponding risk discussion, if true, that this investment strategy is based solely on the price movement of bitcoin, which has been, and may continue to be, driven largely by speculation and thus may not track the underlying health and performance of the Bitcoin blockchain and its protocol in terms of hash rate, active addresses, transaction volume, etc. While this risk may be mitigated by the use of a 10-day and 20-day “exponential moving average price,” please also clarify that any disconnect between the trading price of bitcoin and the fundamentals of the Bitcoin blockchain and its protocol may cause the Fund to miss key underlying trends and thus may ultimately impair its ability to enhance risk-adjusted returns and decrease the downside risk associated with investments in bitcoin-linked instruments.
Response to Comment 17
Pursuant to the Staff’s comment, the section entitled “Principal Investment Strategies” has been revised include the following disclosure, as set forth below:
The Fund utilizes a “long-flat” trend-following investing strategy pursuant to which the Adviser rotates the Fund’s exposure between 100% exposure to Bitcoin Futures Contracts and 100% exposure to U.S. Treasury securities. A long-flat strategy, like the one utilized by the Fund, takes a long position when a trend is detected, seeking to take advantage of an anticipated increase in an asset’s value. However, when a downward trend is detected, instead of shorting the downtrend, the strategy exits the position and remains in cash or cash equivalents. The
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CORRESP
1
filename1.htm
Richard J. Coyle
320 South Canal Street
Partner
Chicago, Illinois 60606
T 312.845.3724
rcoyle@chapman.com
November 26, 2024
VIA EDGAR CORRESPONDENCE
Jennifer McHugh
United States Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, D.C. 20549
Re:
Bitwise Funds Trust
File Nos. 333-264900; 811-23801
Dear Ms. McHugh:
This letter responds to your
comments delivered telephonically regarding the registration statements filed on Form N-1A for Bitwise Funds Trust (the “Registrant”)
with the staff of the Securities and Exchange Commission (the “Staff”) on October 4, 2024 (the “Registration
Statement”). The Registration Statement relates to Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF (formerly,
Bitwise Bitcoin Optimum Roll Strategy ETF), Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF (formerly, Bitwise Ethereum
Strategy ETF) and Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF (formerly, Bitwise Bitcoin and Ether Equal Weight Strategy
ETF) (the “Funds”), each a series of the Registrant. Capitalized terms used herein, but not otherwise defined, have
the meanings ascribed to them in the Registration Statement.
Comment 1 – Fees and Expenses of the Fund
Please provide the Staff a
completed fee table for each of the Funds at least five days prior to the effectiveness of the Registration Statements.
Response to Comment 1
Pursuant to the Staff’s
comment, prospectuses for each Fund containing completed fee tables have been sent to the Staff under separate cover.
Comment 2 – Fees and Expenses of the Fund
The Staff notes the disclosure
set forth in the footnote to the table entitled “Annual Fund Operating Expenses” regarding the fee waiver. If fees previously
waived pursuant to this agreement may be recouped by the Adviser, please disclose as such in this footnote. Additionally, if the fee waiver
agreement can be terminated, please indicate who can terminate it and under what circumstances. Lastly, please ensure that the term of
the fee waiver agreement extends at least one year from the effective date of the Registration Statement.
Response to Comment 2
The Registrant confirms that
fees previously waived pursuant to the fee waiver agreement may not be recouped by the Adviser. Additionally, the referenced footnote
has been revised as set forth below.
(1) The
Fund’s investment adviser has contractually agreed to waive its advisory fees and/or assume as its own expense certain
expenses otherwise payable by the Fund to the extent necessary to ensure that total annual fund operating expenses do not exceed
0.85% of average daily net assets until May 1, 2027. This Agreement may be terminated by the Trust, on behalf of the Fund, at any
time and by the Fund’s investment adviser after May 1, 2027 upon sixty (60) days’ written notice to the Fund.
Comment 3 – Portfolio Turnover Rate
Please confirm that the currently
disclosed portfolio turnover rate of 0% is accurate.
Response to Comment 3
The Registrant so confirms.
Comment 4 – Principal Investment Strategies
Please confirm supplementally
that a Fund will have either 100% exposure to bitcoin, ether or bitcoin and ether (as applicable), or 100% exposure to U.S. Treasury securities.
Response to Comment 4
The Registrant confirms that
each Fund will have either a 100% exposure to the digital asset(s) indicated in its strategy (be that bitcoin, ether, or bitcoin and ether)
or a 100% exposure to U.S. Treasury securities.
Comment 5 – Principal Investment Strategies
The Staff notes the Fund’s
80% investment strategy set forth below.
Under
normal market conditions, the Fund will invest at least 80% of its assets
in Bitcoin Futures Contracts and U.S. Treasury securities.
2
Please consider whether it
would be more appropriate to replace “and” with “or” given that the Fund will have either 100% exposure to Bitcoin
Futures Contracts or 100% exposure to U.S. Treasury securities.
Response to Comment 5
The Registrant acknowledges
the substance and merit of the Staff’s comment. However, due to the mechanism of the strategy and the leverage inherent in futures
contracts, even when the Fund has a 100% notional allocation to Bitcoin Futures Contracts, it will still have 75% of its assets invested
in U.S. Treasury securities. Accordingly, it has determined that to say that the Fund will be invested in Bitcoin Futures Contracts or
U.S. Treasury securities is inescapably misleading. Accordingly, with the utmost respect, the Registrant declines to revise the strategy
as it feels its current articulation most accurately reflects the Fund’s holdings.
Comment 6 – Principal Investment Strategies
The Staff notes the following
disclosure set forth in the second paragraph of the section entitled “Principal Investment Strategies.”
The Fund utilizes a “long-flat”
trend-following investing strategy pursuant to which the Adviser rotates the Fund’s exposure between 100% exposure to Bitcoin Futures
Contracts and 100% exposure to U.S. Treasury securities, based upon a proprietary signal that is based upon bitcoin’s 10-day and
20-day exponential moving average price.
Please revise to include more
disclosure about the meaning of a “long-flat trend-following investing strategy.” Please also provide additional detail regarding
the proprietary signal.
Response to Comment 6
Pursuant to the Staff’s
comment, the referenced disclosure has been revised as set forth below.
The Fund utilizes a “long-flat”
trend-following investing strategy pursuant to which the Adviser rotates the Fund’s exposure between 100% exposure to Bitcoin Futures
Contracts and 100% exposure to U.S. Treasury securities. A long-flat strategy, like the one utilized by the Fund, takes a long position
when a trend is detected, seeking to take advantage of an anticipated increase in an asset’s value. However, when a downward trend
is detected, instead of shorting the downtrend, the strategy exits the position and remains in cash or cash equivalents. The Fund’s
strategy is based upon a proprietary signal that is based upon an observation and comparison of bitcoin’s 10-day and 20-day exponential
moving average price. An exponential moving average applies a weighting factor to each price point, giving exponentially more weight to
recent data, making it a useful tool for identifying trends as it is more responsive to new price changes and trends. This signal is completely
quantitative in nature.
3
Comment 7 – Principal Investment Strategies
The Staff notes the following
disclosure set forth in the section entitled “Principal Investment Strategies.”
Due to the nature of the Fund’s trend-following
investment strategy, there will be periods – and perhaps extended periods – when the Fund has no exposure to Bitcoin Futures
Contracts, as the entirety of its assets will be invested in U.S. Treasury securities.
Please define what the Fund
means by “extended periods.”
Response to Comment 7
The Registrant is unable to
provide a specific definition for “extended periods” because it is inherently unknowable. The Fund’s strategy is based
upon a purely quantitative signal that is based upon the price performance of bitcoin in the future. This disclosure is included to put
investors on notice that depending on the future price performance of bitcoin, there could be very long periods when the Fund is not allocated
to Bitcoin Futures Contracts.
Comment 8 – Principal Investment Strategies
The Staff notes the following
disclosure set forth in the section entitled “Principal Investment Strategies”:
Due to the high margin requirements that are
unique to Bitcoin Futures Contracts and certain tests that must be met in order to qualify as a registered investment company (“RIC”),
the Fund may also utilize reverse repurchase agreements during certain times of the year to help maintain the desired level of exposure
to Bitcoin Futures Contracts.
Please revise to include disclosure
articulating reverse repurchase agreements constitute a form of borrowing.
Response to Comment 8
Pursuant to the Staff’s
comment, the following sentence has been added to the end of the referenced disclosure.
The use of reverse repurchase agreements constitutes
a form of borrowing.
4
Comment 9 – Principal Investment Strategies
The Staff notes that disclosure
set forth in the fourth paragraph of the section entitled “Principal Investment Strategies” regarding the Fund’s use
of swaps. Please revise to include disclosure that such swaps are cash-settled, uncleared and non-exchange traded. Additionally, please
explain why it’s necessary to use swap agreements when bitcoin futures contracts are not trading.
Response to Comment 9
Pursuant to the Staff’s
comment, the referenced disclosure has been revised to include the following:
To the extent the Fund utilizes swap agreements,
such instruments will be cash-settled uncleared and non-exchange traded.
The Fund primarily anticipates
utilizing swap agreements to provide exposure to the price of bitcoin over periods of time, such as weekends, when Bitcoin Futures Contracts
are not trading. This will help the Fund track the price of bitcoin more precisely.
Comment 10 – General
The Staff notes that disclosure
set forth in Item 4 is identical to the disclosure set forth in Item 9. Please consider disclosure that may be removed from Item 4 as
it is more appropriately included in Item 9.
Response to Comment 10
Pursuant to the Staff’s
comment, certain disclosure has been removed from Item 4.
Comment 12 – Principal Risks
The Staff notes the following
risk disclosure set forth in the section entitled “Principal Risks.”
Trend-Following Investing Risk.
The Fund employs a “trend-following” style of investing. Market trends can change quickly and while positive price movement
in bitcoin may cause the Fund to allocate its exposure to Bitcoin Futures Contracts, that trend may not continue. In addition, there may
be periods when the trend-following style of investing is out of favor and the investment performance of the Fund may suffer.
Please consider revising this
risk disclosure to indicate that when the Fund is allocated to U.S. Treasury securities, it may miss out on positive price movements in
bitcoin.
5
Response to Comment 11
Pursuant to the Staff’s
comment, the referenced disclosure has been revised as set forth below.
Trend-Following Investing Risk.
The Fund employs a “trend-following” style of investing based upon bitcoin’s 10-day and 20-day exponential moving average
price. The price movement of bitcoin, has been, and may continue to be, driven largely by speculation and thus may not track the underlying
health and performance of the Bitcoin blockchain and its protocol in terms of hash rate, active addresses, transaction volume, etc. Any
disconnect between the trading price of bitcoin and the fundamentals of the Bitcoin blockchain and its protocol may cause the Fund to
miss key underlying trends and thus may ultimately impair its ability to enhance risk-adjusted returns and decrease the downside risk
associated with investments in bitcoin-linked instruments. Additionally, bitcoin price trends can change quickly and while positive price
movement in bitcoin may cause the Fund to allocate its exposure to Bitcoin Futures Contracts, that positive trend may not continue and
Bitcoin Futures Contracts could experience more volatility than the market as a whole. Conversely, negative price movement in bitcoin
may cause the Fund to allocate its exposure to U.S. Treasury securities and the Fund may miss out on gains experienced by bitcoin prior
to the Fund’s exposure switching back to Bitcoin Futures Contracts. In addition, there may be periods when the trend-following style
of investing is out of favor and the investment performance of the Fund may suffer.
Comment 12 – Financial Highlights
Please provide the Staff a
prospectus for each of the Funds containing completed financial highlights at least five days prior to the effectiveness of the Registration
Statement.
Response to Comment 12
Pursuant to the Staff’s
comment, prospectuses for each Fund containing completed fee tables have been sent to the Staff under separate cover.
6
Comment 13 – Statement of Additional Information
Please provide the Staff a
statement for each of the Funds containing completed “Principal Holders” tables at least five days prior to the effectiveness
of the Registration Statement.
Response to Comment 13
Pursuant to the Staff’s
comment, statements of additional information for each Fund containing completed “Principal Holders” tables have been sent
to the Staff under separate cover.
Comment 14 – Bitwise Trendwise Ethereum and Treasuries
Rotation Strategy ETF
Please revise the disclosure
to make clear that the Ether Futures Contracts held by the Fund are priced based upon the New York Variant of the CME CF Ether-Dollar
Reference Rate.
Response to Comment 14
Pursuant to the Staff’s
comment, the disclosure has been revised accordingly.
Comment 15 – Bitwise Trendwise Ethereum and Treasuries
Rotation Strategy ETF
The Staff notes that the website
for the Bitwise Trendwise Ethereum and Treasuries Rotation Strategy ETF indicates that the Fund has an inception date of September 29,
2023. However, the Fund’s prospectus indicates that the Fund’s portfolio managers have been managing the Fund since October
2023. Please reconcile.
Response to Comment 15
The disparity relates to the
fact that while the Fund went effective on September 29, 2023, it did not commence operations until October. However, to avoid confusion,
the references to an inception date of October 2023 have been revised to September 2023.
Comment 16 – Statement of Additional Information
Please provide the Staff a
statement for each of the Funds containing completed “Principal Holders” tables at least five days prior to the effectiveness
of the Registration Statement.
Response to Comment 16
Pursuant to the Staff’s
comment, statements of additional information for each Fund containing completed “Principal Holders” tables have been sent
to the Staff under separate cover.
7
Comment 17 – Bitwise Trendwise Bitcoin and Treasuries
Rotation Strategy ETF
Please define the 10-day and
20-day “exponential moving average price” and clarify here and/or in the corresponding risk discussion, if true, that this
investment strategy is based solely on the price movement of bitcoin, which has been, and may continue to be, driven largely by speculation
and thus may not track the underlying health and performance of the Bitcoin blockchain and its protocol in terms of hash rate, active
addresses, transaction volume, etc. While this risk may be mitigated by the use of a 10-day and 20-day “exponential moving average
price,” please also clarify that any disconnect between the trading price of bitcoin and the fundamentals of the Bitcoin blockchain
and its protocol may cause the Fund to miss key underlying trends and thus may ultimately impair its ability to enhance risk-adjusted
returns and decrease the downside risk associated with investments in bitcoin-linked instruments.
Response to Comment 17
Pursuant to the Staff’s
comment, the section entitled “Principal Investment Strategies” has been revised include the following disclosure, as set
forth below:
The Fund utilizes a “long-flat”
trend-following investing strategy pursuant to which the Adviser rotates the Fund’s exposure between 100% exposure to Bitcoin Futures
Contracts and 100% exposure to U.S. Treasury securities. A long-flat strategy, like the one utilized by the Fund, takes a long position
when a trend is detected, seeking to take advantage of an anticipated increase in an asset’s value. However, when a downward trend
is detected, instead of shorting the downtrend, the strategy exits the position and remains in cash or cash equivalents. The