Original title: (Shutting down eight ETFs and laying off 14%, why is Bitwise still rolling out new products?)
Original author: ChandlerZ, Foresight News

Bloomberg reported on August 12 that crypto asset management firm Bitwise has laid off about 14% of its employees. Bitwise later confirmed by email that its headcount fell from roughly 180 to about 155 employees—based on two groups of approximations—equivalent to a reduction of around 25 positions. The company did not disclose the specific departments affected, any compensation package, or plans for further adjustments.

In its response, Bitwise CEO Hunter Horsley said the adjusted team is still the largest in the company’s eight-year history, and the company expects it to continue growing as crypto assets are integrated into the global economy. The company remains optimistic about long-term growth, but current staffing and product configurations have already started to tighten.

This year, several crypto companies have also been cutting teams. Coinbase laid off about 700 employees in May, accounting for 14% of its global workforce. Its official explanation mentioned organizational restructuring driven by market volatility, cost control, and AI. The on-chain data platform Dune cut 25% of staff the same month, and its CEO also discussed AI-driven efficiency. BitGo laid off 15% in June, concentrating resources on security, trading, stablecoins, settlement, and AI infrastructure. To date, Bitwise has not disclosed the specific reasons behind this round of layoffs, nor has it attributed them to AI. Whether there is an organizational-level correspondence between the staff reduction and product changes cannot yet be confirmed.

Customer assets decreased by at least $4 billion, and the eight ETFs subsequently exited.

Before the staffing adjustments, Bitwise’s disclosed measure of customer assets had already changed significantly. In a product announcement released on February 3, Bitwise said customer assets were over $15 billion; another announcement released on May 1 showed that, as of April 1, customer assets were $11 billion. Based on the two figures the company disclosed itself, the book difference is at least $4 billion. Bitwise did not explain how much of this change was attributable to coin prices, subscriptions/redemptions, and the scope of reporting.

Customer assets are a reporting measure affected simultaneously by market prices and the movement of capital. An increase or decrease in coin prices changes the market value of assets; customer subscriptions and redemptions change the management units outstanding; and the launch or termination of new products may also change the reporting scope. With data from only two time points, it is impossible to break down how much each factor contributed. Bitwise has not published the relevant breakdown, so the reduction of at least $4 billion cannot be directly equated with net redemptions by customers.

Bitwise’s business includes ETFs, private funds, separately managed accounts, staking, and on-chain investment products. The fee schedules and fee bases for different product types are not uniform, and the company has also not disclosed changes in the composition of assets across the two reporting periods. Bitwise’s disclosed customer-asset base narrowed markedly between the two time points, putting pressure on the asset scale available to charge for asset-management services.

The product exits occurred almost at the same time. On April 30, the board of Bitwise Funds Trust decided to liquidate the Bitwise Web3 ETF and the Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF. The two funds stopped trading in May and completed liquidation. On June 30, the board again decided to liquidate six options-income ETFs. The underlyings are associated with Coinbase, MARA, Strategy, GameStop, Circle, and Ethereum, respectively. The related funds stopped trading and distributed liquidation proceeds in August.

Within about three months, Bitwise concentratedly exited eight ETFs.

The first two funds cover a rotation strategy between Web3-themed stocks and Bitcoin, Ethereum, and U.S. Treasuries, while the remaining six rely on returns from single-stock or Ethereum-related options. The investment logic of the eight products differs, but the commonality is that they all require ongoing support for trading, compliance, valuation, and information disclosure. Liquidation can reduce the number of products that need to be maintained, but its impact on revenue still depends on the assets size and fees rate of each fund before liquidation.

The company exits an old product, and new resources flow to staking and tokenized funds

During the exit of the eight ETFs, Bitwise was still adding products in other directions. In April, the company launched an Avalanche ETP in the European market with an internal staking arrangement. In May, the Hyperliquid ETF officially launched. In June, the company took over the Superstate Crypto Carry Fund with assets of more than $267 million, entering the tokenized-fund management space.

These new products will also generate needs for custody, staking, compliance, and distribution. Changes in product direction cannot be directly equated with a decrease in the overall operational burden. It shows the company is still willing to allocate resources to the new track, and it also puts layoffs and product expansion on the same business list.

In an announcement released on June 30, Bitwise said that it has 70 investment products, serving more than 5,500 private wealth management teams, registered investment advisers, and family offices, and it works with more than 20 banks and broker-dealers. The number of products means the company must continuously carry out operational work such as compliance, custody, trade support, disclosure of information, and customer service. After the team is reduced by about one-seventh, the product mix will directly affect the complexity of the business that the remaining staff need to maintain.

Observing the concentrated liquidation of the eight ETFs alongside new products launched in the same period: the Web3-themed funds and the option-based income strategies built around a single underlying asset were exited. Meanwhile, tokenized products that directly track underlying crypto assets, include staking yield, and move fund shares on-chain continued to receive investment.

After staff were reduced from 180 to 155, the remaining products will be managed by a smaller team. Bitwise has not yet explained which roles are related to the product adjustments, nor has it disclosed one-time layoff costs.

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