Bitwise Cuts 14% Staff, Shuts 8 ETFs Amid $4B Asset Drop

Woofun AI reports that Bitwise, under the leadership of CEO Hunter Horsley, has executed a simultaneous contraction of its workforce and expansion of its product suite, creating a paradoxical operational landscape where layoffs coexist with new launches.

The structural adjustment involved a 14% reduction in headcount, shrinking the team from approximately 180 employees to 155, a net loss of 25 positions confirmed via email correspondence. This move aligns with broader industry trends, where Coinbase laid off around 700 employees in May, representing 14% of its global workforce, citing market fluctuations and AI-driven restructuring. Similarly, on-chain data platform Dune cut 25% of its staff in the same month, attributing the decision to efficiency improvements driven by AI, while BitGo reduced its workforce by 15% in June to focus resources on security, trading, stablecoins, settlement, and AI infrastructure. Bitwise has not explicitly attributed its own layoffs to AI, nor has it disclosed which specific departments were affected or what compensation plans exist for the departing staff.

The financial backdrop for these operational changes is a significant decline in client assets, which dropped from over $15 billion to $11 billion. Data points provided by the company itself highlight this erosion: a product announcement on February 3 stated that client assets exceeded $15 billion, whereas a subsequent announcement on May 1 revealed that as of April 1, those assets had fallen to $11 billion. This discrepancy amounts to a decrease of at least $4 billion in managed capital. The firm did not explain how much of this change was due to fluctuations in cryptocurrency prices, redemptions and deposits, or changes in the scope of statistics, leaving the precise drivers of the asset decline ambiguous.

Analyzing the factors behind this asset drop requires examining the diverse nature of Bitwise's business, which includes ETFs, private funds, separately managed accounts, staking services, and on-chain investment products. The charging standards and calculation bases for these different products vary significantly, and the company has not disclosed any changes in the composition of these assets between the two reporting periods. Client assets are a metric influenced by both market prices and capital flows—rising or falling prices can change the market cap of assets, while customer purchases and sales can affect the managed share count, and new or discontinued products can alter the statistical scope. It is impossible to separate out the impact of each of these factors using data from just two time points, making it difficult to equate the $4 billion decrease directly with net customer redemptions.

The first wave of product withdrawals began on April 30, when the board of directors of Bitwise Funds Trust decided to liquidate the Bitwise Web3 ETF and the Bitwise Trendwise BTC/ETH and Treasuries Rotation Strategy ETF. These two funds stopped trading and were fully liquidated in May. The Bitwise Web3 ETF focused on Web3-themed stocks, while the Trendwise ETF employed strategies involving rotations between Bitcoin, Ethereum, and Treasury bonds. The decision to liquidate these funds marked the initial step in a broader restructuring of the firm's ETF portfolio, signaling a retreat from certain thematic and rotational strategies.

Woofun AI data shows a second wave of liquidations followed on June 30, when the board decided to liquidate six more options-based ETFs. These funds had underlying assets related to Coinbase, MARA, Strategy, GameStop, Circle, and Ethereum. These funds also stopped trading in August, with liquidation proceeds distributed to investors. Within about three months, Bitwise withdrew eight ETFs in total. The latter six funds generated returns through single-stock investments or Ethereum-related options, representing a shift away from complex derivatives and equity-linked products toward a more streamlined offering.

The operational impact of these withdrawals is substantial, as all eight products required ongoing support in terms of trading, compliance, valuation, and information disclosure. Liquidation helps reduce the number of products that need maintenance, but its impact on revenue still depends on the asset size and expense ratio of each fund before liquidation. The range of client assets reported by Bitwise narrowed significantly between the two time points, putting pressure on the scale of assets available for fee generation in its asset management business. The withdrawal of these products almost coincided with other developments, suggesting a coordinated effort to simplify the firm's operational footprint.

Despite the liquidations, new resources were directed toward staking and tokenization funds, indicating a strategic pivot rather than a simple retreat. During the period when the eight ETFs were withdrawn, Bitwise continued to develop new products. In April, the company launched an Avalanche ETP with internal staking arrangements in the European market. In May, the Hyperliquid ETF was launched officially. In June, Bitwise took over the Crypto Carry Fund under Superstate, which had assets worth over $267 million, entering the field of tokenization fund management. These new products also generate needs in areas such as custody, staking, compliance, and distribution, showing that the company is still willing to allocate resources to new areas.

The business scale and client base remain robust, with Bitwise stating in a release on June 30 that it offers 70 investment products. These products serve more than 5,500 private wealth management teams, registered investment advisors, and family offices, and the firm works with over 20 banks and brokerage firms. The large number of products means the company must continuously handle operations related to compliance, custody, trading support, information disclosure, and customer service. Changes in product focus do not necessarily mean a reduction in overall operational burdens, as the new staking and tokenization products require significant infrastructure and expertise.

The strategic conclusion is one of efficiency over retrenchment, with the workforce reduced by one-seventh, from 180 to 155 people. The remaining products will be managed by a smaller team, and the product structure will directly affect the complexity of the tasks remaining for the staff. With Web3-themed funds and options strategies based on single assets phased out, while products that track underlying crypto assets, offer staking rewards, and involve tokenization of fund shares continue to receive investment, Bitwise is clearly prioritizing high-growth, infrastructure-heavy verticals. This marks a decisive shift in the firm's long-term positioning within the digital asset management landscape.