After Suspending 8 ETFs and Downsizing by 14%, Bitwise Forges Ahead with New Product Launch

Original Title: "Why is Bitwise Launching New Products Despite Shutting Down 8 ETFs and a 14% Workforce Reduction?"
Original Author: ChandlerZ, Foresight News

Bloomberg reported on August 12 that cryptocurrency asset manager Bitwise had reduced its workforce by approximately 14%. Bitwise later confirmed via email that the number of employees had decreased from around 180 to about 155, which, based on rough numbers, equates to a reduction of around 25 positions. The company did not disclose the specific departments affected, compensation plans, or future adjustment strategies.

Bitwise CEO Hunter Horsley stated in response that the resized team remains the largest in the company's eight-year history and anticipates continued growth as cryptocurrencies become more integrated into the global economy. The company remains optimistic about long-term growth, but it has already begun to tighten personnel and product configurations.

Several crypto firms have also downsized their teams this year, with Coinbase laying off around 700 employees in May, accounting for 14% of its global workforce. The official explanation cited market fluctuations, cost control, and organizational restructuring due to AI. Blockchain data platform Dune reduced its team by 25% in the same month, with the CEO mentioning AI efficiency. BitGo reduced its workforce by 15% in June, focusing resources on security, trading, stablecoins, settlements, and AI infrastructure. Bitwise has not disclosed the specific reasons for this round of layoffs and has not attributed it to AI. It is currently unclear whether there is an organizational correlation between this downsizing and product adjustments.

Client Assets Decrease by at Least $40 Billion, Eight ETFs Exit as a Result

Prior to the workforce adjustment, Bitwise had disclosed a significant change in client asset figures. In a product announcement on February 3, Bitwise stated that client assets exceeded $15 billion. Another announcement on May 1 showed that as of April 1, client assets were $11 billion. Based on the company's two self-disclosed figures, there was a difference of at least $40 billion. Bitwise did not explain how much of this change was due to coin prices, subscriptions, redemptions, and the scope of statistics.

Client assets are a statistical measure influenced by both market prices and fund flows. Price fluctuations can change asset valuations, client subscriptions and redemptions can alter managed shares, and the addition or termination of products can also change the statistical scope. Data from two points in time cannot separate how much each of these factors contributed. Bitwise did not disclose specific details, so the decrease of at least $40 billion cannot be directly equated to net client redemptions.

Bitwise's business includes ETFs, private funds, separately managed accounts, staking, and on-chain investment products. The fee structures and billing bases for various products are not uniform, and the company has not disclosed changes in the composition of assets between the two reporting periods. The disclosed client asset base significantly narrowed between two points in time, putting pressure on the fee-earning asset base of the asset management business.

Product exits almost occurred during the same period. On April 30, Bitwise Funds Trust's board of directors decided to liquidate the Bitwise Web3 ETF and Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF. The two funds ceased trading in May and completed liquidation. On June 30, the board of directors again decided to liquidate six option income ETFs, with underlying assets linked to Coinbase, MARA, Strategy, GameStop, Circle, and Ethereum. The related funds ceased trading in August and distributed liquidation proceeds.

Within about three months, Bitwise concentratedly exited eight ETFs.

The first two funds covered Web3-themed stocks and a rotation strategy between Bitcoin, Ethereum, and U.S. Treasuries, while the latter six relied on single-stock or Ethereum-related options for income generation. The eight products had different investment logics, but a commonality was that they all required ongoing trading, compliance, valuation, and disclosure support. Liquidation can reduce the number of products that need to be maintained, and its revenue impact still depends on the asset size and fee structure of each fund before liquidation.

Exit of Old Products, Flow of New Resources to Staking and Tokenized Funds

During the exit of the eight ETFs, Bitwise continued to expand in other directions. In April, the company launched an Avalanche ETP with an internal staking arrangement in the European market; in May, the Hyperliquid ETF was officially launched; and in June, the company took over Superstate's Crypto Carry Fund, which had assets exceeding $267 million, entering the tokenized fund management field.

These new products will also entail custody, staking, compliance, and distribution requirements. A shift in product direction does not directly translate to a reduction in overall operational burden. It indicates that the company is still willing to allocate resources to new tracks while staff reductions and product expansion appear on the same business agenda.

In an announcement released on June 30, Bitwise stated that the company has 70 investment products, serving over 5,500 private wealth management teams, registered investment advisors, and family offices, and collaborating with over 20 banks and broker-dealers. The number of products implies that the company needs to continuously bear the operational work of compliance, custody, trade support, disclosure, and customer service. With a team reduction of about one-seventh, the product structure will directly impact the business complexity that the remaining staff needs to maintain.

Observing the centralized clearance of eight ETFs alongside the launch of new products in the same period, Web3-themed funds and options income strategies built around a single underlying asset have been discontinued. Products directly tracking underlying crypto assets, offering staking rewards, and tokenized products that move fund shares onto the blockchain continue to attract investment.

After the team was reduced from 180 to 155 people, the remaining products will be managed by a smaller team. Bitwise has not specified which positions are related to the product adjustments, nor has it disclosed any one-time termination costs.

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