Bitwise's 'Debasement' ETF Pairs Bitcoin and Gold as a Hedge Against Your Depreciating Dollars

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Crypto asset manager Bitwise debuted an exchange-traded fund on Thursday that offers exposure to cryptocurrency and precious metals, positioning the product as a way for investors to capitalize on the debasement of fiat currencies, including the U.S. dollar.

The Bitwise Proficio Currency Debasement ETF, which trades on the NYSE under the ticker symbol BPRO, is issued in partnership with Proficio Capital Partners, a Boston-based investment advisory firm that manages around $5 billion in assets, according to a press release.

The actively-managed fund, which adjusts exposure to various assets in relation to market conditions, will seek to have at least a 25% stake in gold at any point, alongside strategic allocations to silver, platinum, palladium, mining equities, and Bitcoin.

The fund’s debut comes as gold and silver prices have respectively climbed 79% and 207% over the past year to new heights, according to Yahoo Finance. Meanwhile, the largest digital asset by market cap has slid 15% over the last year despite hitting a fresh peak above $126,000 in October, according to CoinGecko.

Over the past year, the so-called debasement trade has grown in prominence, bolstered by fears that governments, particularly the U.S., could try to finance deficits with cheaper money. The trade is also linked to expectations of money printing and inflation, which has the potential to destroy lots of wealth very fast, according to Bitwise Chief Investment Officer Matt Hougan.

“My view is that the biggest risk to the long-term financial health of a wealthy family is actually debasement,” he told Decrypt. “I’m not saying that the dollar is going in that direction, but it’s lost a lot of value over the last 15 years, and that loss of value is accelerating.”

Hougan said the product is designed for financial advisors who may have “0% exposure to something that covers their biggest flank for losing wealth over time,” adding that his son owns a $10 trillion Zimbabwean dollar banknote as a curio. The country faced hyperinflation in 2008.

BPRO has an expense ratio of 0.96%, meaning that it’s more costly for investors to hold than Bitwise’s $3.5 billion spot Bitcoin ETF, which features a 0.2% expense ratio. That fund is the fifth-largest spot Bitcoin ETF in the U.S. by assets under management.

Ray Dalio, the billionaire hedge fund manager, has been advising people for at least a year to allocate at least 15% of their portfolios to gold and Bitcoin, warning of a looming debt crisis among major economies. However, he has expressed a strong preference for the precious metal, doubting Bitcoin’s ability to become adopted by central banks.

“The big demand category that’s driven the gold move was central bank purchases, which started in earnest in 2022,” Hougan said. “Eventually, that excess demand dried up all the available supply, and we got this parabolic move.”

Last year, BlackRock CEO Larry Fink described Bitcoin and gold as “assets of fear.” However, the digital asset has behaved more like a risk-on asset lately, analysts say. Fink said fears over financial and physical security could also drive investors toward the assets.

Central banks aren’t buying Bitcoin, but Hougan pointed to spot Bitcoin ETFs, and the demand they’ve seen from institutional investors, as a similar dynamic. Collectively, they’ve been buying more than 100% of the Bitcoin that’s mined each day since their debut in early 2024, he added.

“My thesis is, if ETF purchasers continue to buy more than 100% of the supply of Bitcoin, eventually it will have the same parabolic move that gold did,” he said. “It’s really just supply and demand, and gold has this extra demand dynamic of central banks that Bitcoin doesn’t have.”