Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.

com 1

CRYPTO MARKET
QUARTERLY REVIEW
Q2 2022
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 2

EXECUTIVE SUMMARY
Q2 2022 was a historically challenging quarter for crypto. Consider that:
❖ Q2 was the worst quarter for crypto prices in 10 years, with the Bitwise
10 Large Cap Crypto Index falling 62.8%.
❖ June was the worst month ever for bitcoin, with the flagship crypto asset
down 40.2%.
❖ Other crypto assets had a rough month as well: Ethereum fell 47.2%, and
Solana fell 29.7%
It wasn’t just falling prices, either. Crypto faced a relentlessly negative news flow,
including:
❖ The $60 billion failure of Terra and its “algorithmic stablecoin” UST
❖ The collapse of crypto lending firms like Celsius and Voyager
❖ The implosion of Three Arrows Capital, the largest crypto hedge fund
❖ The U.S. Securities and Exchange Commission’s rejection of the two
leading spot bitcoin ETF applications
The media piled onto the negative narrative, with stories declaring the “end of
crypto” and telling inventors why crypto was headed to zero.
Instead, in the middle of June, private market actors—including crypto exchange giant FTX—
stepped in to stop the negative credit cascade by backstopping troubled crypto lenders like BlockFi.
Markets normalized, forced liquidations slowed, and asset prices recovered. As we go to press,
bitcoin and ethereum are trading 16% and 50% above their recent lows, respectively.*
The outlook for crypto in the remainder of the year is mixed. We face huge macroeconomic and
regulatory headwinds, balanced against massive technological progress and increased adoption of
Ethereum, Layer 2 solutions, and DeFi. We also have entirely new areas of the market developing,
like non-art NFTs, blockchain gaming, Web3 solutions, and more.
In this report, we’ve aimed to capture key learnings and identify important data trends for critical
areas of crypto, including market trends, bitcoin, ethereum and emerging Layer 1 blockchains, DeFi,
NFTs, and crypto equities. We look at key performance indicators and fundamental data, trying to
offer a 360o view of what’s going on in the space.
This report will be produced every quarter from here on, so if you have feedback on what you’d like
to hear more about we would love to hear from you at investors@bitwiseinvestments.com.
Matthew Hougan David Lawant Alyssa Choo Anais Rachel
Chief Investment Officer Director of Research Crypto Research Analyst Crypto Research Analyst

And then, a funny thing occurred: That didn’t happen.

Gayatri Choudhury Juan Leon Ryan Rasmussen
Quantitative Analyst Crypto Research Analyst Crypto Research Analyst
*Note: Cumulative returns from June 18 2022 to July 26, 2022.
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 3

TABLE AUTHORS
OF CONTENTS
Matthew Hougan David Lawant
Chief Investment Officer Director of Research
@Matt_Hougan @dlawant
01 Market Overview

02 Bitcoin
Alyssa Choo Anais Rachel
03 Ethereum & Emerging Layer 1s (L1s) Crypto Research Analyst Crypto Research Analyst
Crypto Equities Ethereum & Emerging Layer 1s
@alyssachoo_ @Anais_Rchl
04 Decentralized Finance (DeFi)

05 Non-Fungible Tokens (NFTs)

Gayatri Choudhury Juan Leon
Quantitative Analyst Crypto Research Analyst
06 Crypto Equities
On-Chain Analytics Crypto Equities
@GayatriPC_ @singularity7x
07 Crypto Fundamentals Guide

Ryan Rasmussen
Crypto Research Analyst
Decentralized Finance (DeFi)
@RasterlyRock
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 4

01
MARKET
OVERVIEW
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Q2 2022 Review: Crypto experienced its worst quarter for returns since 2011, as macro
headwinds and a crypto credit crisis crushed returns. But there are signs of a bottom.

Performance of Bitwise Indices From March 31 to June 30, 2022 (%) Key Performance Indicators1
For the quarter ending June 30, 2022

MARKET CAP
-57.59% QoQ
$870.69 billion

TRADING VOLUME
-15.82% QoQ
$622.50 billion

CORRELATION - SPY VS. BITWISE 102

-12.92% QoQ
0.63

BITCOIN DOMINANCE
-3.57% QoQ
42.90%

ETHEREUM DOMINANCE
-18.37% QoQ
15.37%

Source: Bitwise Asset Management with data from The Block, IEXCloud, and CoinMarketCap.
Note: (1) KPI figures are calculated for the entire crypto market unless otherwise noted. (2) Calculated using the 90-day correlations for March 31 and June 30, 2022. SPY refers to the SPDR S&P 500 ETF Trust. Bitwise 10 refers to the Bitwise 10 Crypto Index.
Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index. Index performance does not include the fees and expenses that are charged by any Fund. Fund returns may differ materially from the returns of the Index. Past performance is no guarantee
of future results. Please refer to additional important disclosures at the back of this document.

MARKET OVERVIEW
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 6

Key Takeaway #1: Crypto prices collapsed in Q2 mainly on the back of the LUNA collapse and the
credit crisis (Celsius, Voyager, 3AC, etc.) which generated forced selling pressure in June.

Performance of the Bitwise 10 Large Cap Crypto Index and Select Key Credit or Deleveraging Events From April 2022 to July 2022 Downward price pressure
exposed entities that were not
July 1: Crypto exchange FTX announces it will backstop
properly handling risk. Among the
BlockFi and secures an option to acquire the company. leading companies that faced
May 7: UST, the stablecoin of Crypto broker Voyager Digital pauses activities amid liquidity issues were credit providers
the Terra ecosystem, starts to losses related to 3AC exposure.
Celsius and BlockFi, crypto hedge
lose its peg to the U.S. dollar.
fund giant Three Arrows Capital
(3AC), and publicly listed broker
July 5: Voyager files for
Voyager Digital.
Chapter 11 bankruptcy
June 12: Credit provider Celsius
proceedings in the
freezes withdrawals and transfers,
Southern District of NY. The credit cascade may have
confirming market concerns.
stopped at the very end of the
July 13: Celsius files for quarter. Crypto exchange FTX
Chapter 11 bankruptcy stepped in to backstop (and may
May 12: The price of LUNA, the proceedings in the
native token of the Terra Southern District of NY. ultimately acquire) BlockFi, one of
ecosystem, falls 96% in a day. the largest crypto lenders, which
stemmed the credit cascade.
June 17: Crypto hedge fund giant Three
Although the risk of additional
Arrows Capital (3AC) confirms heavy insolvency or liquidity issues cannot
losses incurred.
be ruled out, no other significant
company failures have been
reported since then.

Source: Bitwise Asset Management.

MARKET OVERVIEW
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Key Takeaway #2: Correlations between crypto and traditional asset classes peaked in May but have
been falling sharply since. We think this downward trend is likely to continue.

30-Day Rolling Correlations Between the Bitwise 10 Large Cap Crypto Index and the S&P 500 Index From January 2021 to June 2022 Correlations between crypto and
traditional assets peaked in May,
raising eyebrows. I thought crypto was
supposed to have low correlations to
stocks, people said.

But those correlations started to fall

sharply in June. Crypto prices are driven
by both macro- and crypto-specific
factors. In the first four months of the
year, macro dominated; in June,
crypto-specific factors took charge.

We expect crypto correlations to trend

down in H2. The natural state of
crypto/equity correlations is low. As
investors worry about the impact of a
recession on corporate earnings, we
expect crypto to decouple materially from
equity returns.

Source: Bitwise Asset Management with data from Bloomberg.

Past performance is no guarantee of future results.

MARKET OVERVIEW
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Key Takeaway #3: The regulatory/legislative landscape heated up significantly. We expect this to reach
a fever pitch in the next 12 months. In the U.S., stablecoin regulation will likely take the front seat.

INITIATIVE RELEASE DATE AGENCY GENERAL OVERVIEW

Stablecoin TRUST Act
Discussion draft bill for stablecoin issuers in the U.S. Would define a "payment stablecoin" as a stablecoin that
does not pay interest and is used as a medium of exchange. Would also authorize three different options to issue
U.S. Senate
April 6, 2022
(Patrick Toomey)
stablecoins, including a new specific federal license issued by the Office of the Comptroller of the Currency
(OCC). Subjects all stablecoin issuers to standardized disclosure requirements and clarifies that stablecoins are
not securities.

Lummis-Gillibrand U.S. Senate Wide-reaching, bipartisan bill to address the biggest questions in crypto. Would define a standard to classify
(Cynthia Lummis crypto assets as either securities or commodities, with most assets likely falling in the latter category. Would also
Responsible Financial June 7, 2022
and Kirsten give authority to regulate spot crypto exchanges to the CFTC. Would exempt crypto transactions under $200 from
Innovation Act Gillibrand) capital gains taxes. Due to its complexity, seems unlikely to be pushed through the Senate in 2022.

A provisional agreement was reached in the Council Presidency and European Parliament but is still subject to
approval. Would establish regulations regarding consumer protection, with service providers becoming liable in
Markets in Crypto Assets European
June 30, 2022 case of losing customers’ assets, and would require actors to report their environmental and climate footprint,
(MiCA) Parliament
among other provisions. Would also establish a legal framework for stablecoins that includes requiring 100%
reserve deposits.

Framework for International
July 7, 2022
Engagement on Digital Assets
First report published by the Treasury as a result of President Joe Biden’s executive order on crypto. Does not
U.S. Department provide specific instructions, but sets a broad goal of protecting investors and financial stability while supporting
of Treasury technological advancements that promote responsible development and use of digital assets. Also lists key
international parties (G7, FASB, FATF, IMF, and others) relevant to the issue.

Source: Bitwise Asset Management.

MARKET OVERVIEW
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Performance of Bitwise Crypto Indices

CUMULATIVE RETURNS

ASSET DESCRIPTION 1 MONTH 3 MONTHS YTD 1 YEAR 3 YEARS

Bitwise 10 Large Cap Crypto Index Top 10 crypto assets by market capitalization, rebalanced monthly -41.25% -62.83% -65.00% -49.60% 49.77%

Bitwise 10 ex Bitcoin Large Cap Crypto Index Top 10 crypto assets by market capitalization excluding bitcoin, rebalanced monthly -43.31% -69.43% -73.51% – –

Bitwise Decentralized Finance Crypto Index Top 10 DeFi assets by market capitalization, rebalanced monthly -32.99% -66.10% -76.18% -74.65% –

Bitwise Blue-Chip NFT Collections Index Top 10 art & collectibles NFT collections by market capitalization, rebalanced quarterly -44.51% -75.22% -68.07% – –

Bitwise BTC/ETH Equal Weight Crypto Index 50% bitcoin/50% ethereum strategy, rebalanced quarterly -43.50% – – – –

Portfolio of 30 “picks and shovels” companies building out the core infrastructure for
Bitwise 30 Crypto Innovators Index -36.89% -67.94% -73.62% -76.10% –
crypto to thrive

Source: Bitwise Asset Management as of June 30, 2022.

Note: Returns for periods over one month are only shown for indices with sufficient history.
Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index. Index performance does not include the fees and expenses that are charged by any Fund. Fund returns may differ materially from the returns of the Index. Past performance is no guarantee
of future results. Please refer to additional important disclosures at the back of this document.

MARKET OVERVIEW
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02
BITCOIN
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Q2 2022 Review: Bitcoin finished Q2 2022 down 58.57% but slightly outperforming the overall
crypto market and showing early signs of recovery at the end of the quarter.

Performance of Bitcoin and the Bitwise 10 Index From March 31 to June 30, 2022 (%) Key Performance Indicators
For the quarter ending June 30, 2022

MARKET CAP
-56.37% QoQ
$377.53 billion

TRADING VOLUME
-11.70% QoQ
$371.20 billion

HASHRATE
+28.72% QoQ
251 EH/s

MEDIAN TRANSACTION FEES

-59.05% QoQ
$0.43

LIGHTNING NETWORK CAPACITY

+9.62% QoQ
3.99k BTC

Source: Bitwise Asset Management, The Block, CoinMarketCap and Coin Metrics as of June 30, 2022.
Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index. Index performance does not include the fees and expenses that are charged by any Fund. Fund returns may differ materially from the returns of the Index. Past performance is no
guarantee of future results. Please refer to additional important disclosures at the back of this document.

BITCOIN
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 12

Key Takeaway #1: The SEC rejected the Bitwise and Grayscale spot bitcoin ETF applications, dimming
hopes for approval in the near term.

The SEC rejected the bitcoin spot ETF applications by

Bitwise and Grayscale in June. Soon after the rejection,
Grayscale sued, claiming the decision was "arbitrary and
capricious." The suit could take at least 9-18 months to
adjudicate and will not necessarily lead to an approval.

The SEC's hang-up remains the potential for market

manipulation and the lack of surveillance of market
manipulation. In its view, crypto trading venues like Coinbase
are not regulated like the NYSE and therefore don't have the
same protections. Some think we won't get a spot bitcoin ETF
approval until those trading venues are regulated by the SEC.
Meanwhile, spot bitcoin ETFs trade in Canada, Germany,
Brazil, Australia, and other nations.

BITCOIN
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Key Takeaway #2: CPI inflation prints at a four-decade high and bitcoin does not rise as a result. This
does not mean that bitcoin is a bad inflation hedge. It only shows that the CPI is backward looking.

One-Year Rolling Correlations of Daily Returns for Bitcoin (black line) and Select Risk Assets1 (green shade) vs. Changes in Five-Year Measuring how good an asset is as an
Breakeven Inflation, Smoothed by 180-Day Moving Average, From January 1, 2016 to July 15, 2022 inflation hedge is trickier than it
seems. The problem with comparing the
CPI index with asset returns is that the
former is backward-looking while the
latter is forward-looking. This is even
more challenging for a complex and
Post COVID shock, bitcoin has
established a higher correlation with emerging asset like bitcoin, which has
Until the COVID crisis, inflation expectations, most of the other factors that impact returns.
bitcoin’s correlation with time at the higher end compared to
inflation expectations was other risk assets.*
dispersed and mostly in
A better approach is to look at
the lower end compared to
other risk assets.* inflation expectations, which paints a
different picture. There appears to be
an emerging long-term relationship
between bitcoin and inflation
expectations since the COVID crisis. The
maintenance of this relationship going
forward would be a strong indicator of
bitcoin as an inflation hedge.

Source: Bitwise Asset Management with data from Bloomberg. Past performance is no guarantee of future results.
Note: (1) The green shade aggregates data from the following assets and indices: S&P 500 Index (SPX), Nasdaq Composite Index (CCMP), Russell 2000 Index (RTY), MSCI Emerging Markets Index (MXEF), Ark Innovation ETF (ARKK), Gold (United States Dollar Spot, XAU), Oil (WTI Cushing OK Spot,
USCRWTIC), Bloomberg Commodity Index (BCOM), iShares iBoxx Investment Grade Corporate Bond ETF (LQD), iShares iBoxx High Yield Corporate Bond ETF (HYG), Bloomberg Emerging Markets Hard Currency Aggregate Index (EMUSTRUU), MSCI U.S. REIT Index (RMZ), and MSCI World Real Estate
Index (MXWOORE).

BITCOIN
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Key Takeaway #3: Could Bitcoin compete more directly with Ethereum? A newly launched technology
called Taro could be step in this direction, with stablecoins likely to be the first use case.

Taro will allow the issuance and

transfer of other assets, such as
stablecoins and NFTs, on bitcoin. This
is made possible by leveraging two
existing bitcoin core features: The
By leveraging both the Lightning Lightning Network, which allows for fast
Network and Taproot, Taro allows
other assets to be issued and
and cheap transitions, and Taproot,
transferred efficiently through the which allows bitcoin to execute more
bitcoin network. complex transactions.

This expands bitcoin’s utility by

allowing it to be used for a broader
range of use cases. Although “digital
gold” is still the dominant narrative,
bitcoin is evolving to become a
One of the key features of this
Launched in 2017, this payment long-awaited upgrade settlement layer and potentially compete
protocol built on top of bitcoin activated in the end of 2021 for markets that currently are only
allows the execution of fast, was to extend bitcoin’s ability
cheap, and private small targeted by ethereum and its
to execute smart contracts.
transactions. competitors.

Source: Bitwise Asset Management.

BITCOIN
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Performance of Bitcoin and Select Global Macro Assets

CUMULATIVE RETURNS
1
MARKET CAP
ASSET DESCRIPTION TICKER PRICE 1 MONTH 3 MONTHS YTD 1 YEAR 3 YEARS
(USD TRILLIONS)

Bitcoin First and leading crypto asset; digital gold BTC $18,894.92 $0.389 -40.21% -58.57% -58.81% -45.16% 53.32%

Oil (brent crude) United States Oil Fund USO $80.35 $174.843 -5.99% -8.41% -47.81% -62.19% -16.58%

Large Cap U.S. Equities SPDR S&P 500 ETF SPY $377.25 $35.211 -8.25% -16.11% -19.98% 10.49% 35.18%

Emerging Markets Equities iShares MSCI Emerging Markets ETF EEM $40.10 $25.474 -5.16% -10.43% -17.21% -26.12% -0.90%

10-Year Treasury iShares 7-10 Year Treasury Bond ETF IEF $102.14 $13.584 -0.86% -4.47% -10.56% -10.30% -3.71%

Gold SPDR Gold Shares ETF GLD $168.46 $13.080 -1.57% -6.75% -1.46% 1.13% 26.47%

Corporate Bonds - iShares iBoxx Investment Grade Corporate

LQD $109.73 $8.517 -3.62% -8.40% -16.08% -15.95% -4.58%
Investment Grade Bond ETF

U.S. Dollar U.S. Dollar Currency Index DXY 104.69 $2.278 2.88% 6.48% 9.42% 13.93% 8.90%

Corporate Bonds - iShares iBoxx High Yield Corporate Bond

HYG $73.28 $1.503 -7.05% -9.48% -13.77% -12.68% -3.30%
High Yield ETF

Commodities Bloomberg Commodity Index BCOM 117.05 – -10.88% -5.92% 18.03% 25.77% 46.95%

Source: Bitwise Asset Management with data from Bloomberg, CoinMarkerCap.com, CompaniesMarketCap.com, FactSet, Federal Reserve Bank of St. Louis, IEXCloud, OPEC, and Statista as of June 30, 2022.
Note: (1) Market Cap reflects the aggregate market capitalization of the Asset denoted, not of the fund represented by the Ticker. Market Cap for 10-Year Treasury aggregates U.S. treasury notes with maturities between 2 and 10 years. Market Cap for Corporate Bonds - Investment Grade and Corporate Bonds
- High Yield sourced from SIFMA as of March 31, 2022.
Past performance is no guarantee of future results.

BITCOIN
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03
ETHEREUM &
EMERGING L1s
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Q2 2022 Review: Ethereum and emerging Layer 1 blockchains (“L1s”) sold off sharply in Q2, under-
performing bitcoin. But we expect ETH to rebound first and maybe furthest when markets recover.
Performance of Bitwise 10 ex Bitcoin Index,¹ Bitwise 10 Index,² Ethereum, and Emerging Layer 1 Blockchains From March 31 to June 30, 2022 (%) Key Performance Indicators
For the quarter ending June 30, 2022

MARKET CAP OF TOP 10 ASSETS

-65.67% QoQ
$212.45 billion

MEDIAN DAILY TRANSACTION COUNT3

-21.77% QoQ
2.25 million

FEES GENERATED4
-76.79% QoQ
$5.26 million

L2 % OF FEES ON ETHEREUM5
+0.69 pp QoQ
1.53%

L2 TVL AS A % OF ETHEREUM TVL6

+2.43 pp QoQ
8.09%

Source: Bitwise Asset Management with data from CoinMarketCap, L2Fees.info, CryptoFees.info, Etherscan, Explorer.near, Avalanche, DeFi Llama, L2 Beat, and SnowTrace as of June 30, 2022. Tickers refer to the following crypto assets (in alphabetical order): Cardano (ADA), Algorand (ALGO), Cosmos
(ATOM), Avalanche (AVAX), BNB Chain (BNB), Polkadot (DOT), Ethereum (ETH), Near Protocol (NEAR), Solana (SOL), and VeChain (VET).
Notes: (1) Constituents of the Bitwise 10 ex Bitcoin Large Cap Crypto Index: Ethereum (ETH), Cardano (ADA), Solana (SOL), Polkadot (DOT), Avalanche (AVAX), Litecoin (LTC), Polygon (MATIC), Chainlink (LINK), and Uniswap (UNI) (2) Constituents of the Bitwise 10 Large Cap Crypto Index as of June 30, 2022
include the above assets along with Bitcoin (BTC). (3) “Median daily transaction count” excludes Polkadot, Near Protocol, VeChain, and Cosmos due to missing data. Additionally, only Avalanche’s C-Chain is included due to missing data. (4) “Fees generated” is calculated using seven-day averages as of
3/31/2022 and 6/30/2022. The figure does not include Cosmos, Algorand, and VeChain due to missing data. (5) “L2 % of Fees on Ethereum” refers to the percent of all Ethereum fees paid by L2 platforms. The figure is calculated using daily fees generated on 3/31/2022 and 6/30/2022. (6) “L2 TVL as a % of
Ethereum TVL” is calculated using daily TVL figures as of 3/31/2022 and 6/30/2022.
Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index. Index performance does not include the fees and expenses that are charged by any Fund. Fund returns may differ materially from the returns of the Index. Past performance is no guarantee of
future results. Please refer to additional important disclosures at the back of this document.

ETHEREUM & EMERGING LAYER 1s

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Key Takeaway #1: The Merge is coming! The Merge is coming! After long delays, Ethereum developers
set a date (Sept. 19) for the blockchain’s transition to proof-of-stake. We think it’s a very big deal.
Ethereum has been planning to transition from “proof-of-work” to “proof-of-stake” since its creation in 2015. That transition has been delayed multiple
times, but is now set for September 19, 2022. The image below displays the history of this process and outlines why the switch is a big deal.

Source: Bitwise Asset Management.

ETHEREUM & EMERGING LAYER 1s

 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 19

Key Takeaway #2: After The Merge, the next big challenge for Ethereum will be scaling. Layer 2 rollups
like Arbitrum and Optimism, which showed small but material growth in Q2, could be the answer.

Daily Transactions¹ on Arbitrum and Optimism From April to June 2022 Ethereum can process a limited
number of transactions. During times of
Norway Building More Inclusive Financial
Markets on Arbitrum
high network usage, costs soar. Facing
The government announces a new platform this, some applications, like the
on Arbitrum that allows Norwegian citizens derivatives exchange dYdX, have chosen
to purchase unlisted company shares.
to leave Ethereum for other, cheaper
blockchains.
Optimism Token Launch
Optimism releases its governance Layer 2 solutions (technologies that
token to early adopters to drive
process transactions “on top of”
ecosystem development.
Optimism Introduces Governance Ethereum) are one key to growth.
The Optimistic Collective, a decentralized
autonomous organization (DAO), will Q2 was significant for these assets,
govern the network and fund public goods. which saw transaction counts rise and, in
some cases, launched tokens to catalyze
interest and investment.
Odyssey Initiative Goes Live
Users are rewarded with NFTs for
interacting with Arbitrum, leading Top scaling solutions are now their
to record-breaking activity and own ecosystems, and companies are
fees surpassing Ethereum's.
interested. Reddit, known as “The Front
Page of the Internet,” will launch its first
NFT marketplace on Polygon, the largest
ETH scaling tool.
Source: Bitwise Asset Management with data from Arbiscan and Optimistic.etherscan.io as of June 30, 2022.
Notes: (1) Daily transactions are calculated as a seven-day simple moving average.

ETHEREUM & EMERGING LAYER 1s

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Key Takeaway #3: Solana daily activity gained traction as NFT usage ramped up, partnerships grew,
and ambitions to bring crypto to mobile accelerated.

Seven-Day Moving Average of Active Addresses on Solana From January 1 to June 30, 2022 (millions) Solana offers lower transaction costs
Magic Eden closes $130M Series B than Ethereum. The average cost of a
round, three months after closing a transaction on Solana is a fraction of a
$27M Series A round.
penny, compared to multiple dollars on
Ethereum.
Coachella and FTX launch
Solana-based NFT lifetime OpenSea, the NFT marketplace
festival passes. unicorn, integrates Solana.
Solana is making significant moves in
NFTs. The #1 NFT marketplace in the
world, OpenSea, started offering trading
Solana announces Web3 in Solana-based NFTs in Q2. In addition,
“Saga” smartphone.
the #1 Solana-native NFT marketplace,
Magic Eden, raised $130 million on a $1.6
billion valuation.

Solana’s crypto wallet Are low fees enough? Ethereum remains

goes live on Android.
$109M Series B funding round for by far the dominant blockchain for smart
Phantom, Solana's crypto wallet contracts, but Solana may find unique
and Metamask competitor.
Video game developer Krafton use cases by keeping fees low.
partners with Solana Labs to
collaborate on NFT-based games.

Source: Bitwise Asset Management with data from The Block and Hello Moon as of June 30, 2022.

ETHEREUM & EMERGING LAYER 1s

 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 21

Performance of Ethereum and Top Emerging Layer 1s

CUMULATIVE RETURNS

MARKET CAP
ASSET DESCRIPTION TICKER COIN PRICE 1 MONTH 3 MONTHS YTD 1 YEAR 3 YEARS
(USD BILLIONS)

Ethereum First and leading smart contracts platform ETH $1,019.58 $129.526 -47.25% -68.96% -72.03% -51.80% 228.57%

Binance's smart-contract blockchain; good

BNB Chain BNB $212.18 $35.807 -33.39% -50.35% -58.22% -27.85% -27.85%
interoperability

Peer-reviewed approach; robust

Cardano ADA $0.44 $15.481 -25.73% -61.28% -65.55% -66.56% 405.85%
programming language

Ethereum's leading alternative; lower

Solana SOL $31.98 $11.517 -29.71% -74.00% -80.99% -4.73% –
transaction fees

Substrate to independent yet interoperable

Polkadot DOT $6.80 $6.952 -33.75% -68.11% -74.17% -56.93% –
blockchains

Deploys subnets: scalable and interoperable

Avalanche AVAX $16.24 $4.780 -37.75% -82.83% -84.83% 42.45% –
blockchains

Climate-neutral application network; high

Near Protocol NEAR $3.24 $2.412 -44.52% -75.48% -77.30% 65.17% –
throughput

Blockchain building an inclusive, borderless

Algorand ALGO $0.30 $2.172 -25.36% -67.08% -81.67% -64.33% –
economy

Connects independently secured,

Cosmos ATOM $7.18 $2.165 -29.18% -75.04% -76.61% -32.33% 21.64%
application-specific blockchains

Blockchain focusing on supply chain

VeChain VET $0.02 $1.648 -33.29% -72.30% -73.11% -72.93% –
management

Source: Bitwise Asset Management with data from CoinMarketCap as of June 30, 2022.
Note: Three-year returns are only shown for assets with sufficient history.
Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index. Index performance does not include the fees and expenses that are charged by any Fund. Fund returns may differ materially from the returns of the Index. Past performance is no guarantee
of future results. Please refer to additional important disclosures at the back of this document.

ETHEREUM & EMERGING LAYER 1s

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04
DEFI
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 23

Q2 2022 Review: Decentralized Finance (“DeFi”) assets got crushed in the crypto bear market; blue
chips saw buying in the final weeks of the quarter.
Performance of Bitwise Decentralized Finance Index, Its Constituents, and the Bitwise 10 Index From March 31 to June 30, 2022 (%) Key Performance Indicators
For the quarter ending June 30, 2022

MARKET CAP1
-74.12% QoQ
$35.88 billion

TOTAL VALUE LOCKED (TVL)2

-67.54% QoQ
$72.82 billion

REVENUE3
-39.29% QoQ
$421.56 million

DEX TRADING VOLUME

-7.76% QoQ
$361.85 billion

STABLECOIN SUPPLY
-20.00% QoQ
$143.57 billion

Source: Bitwise Asset Management with data from CoinMarketCap, CoinGecko, Coin Metrics, The Block, and DeFi Llama as of June 30, 2022.
Notes: Tickers refer to the following crypto assets, in alphabetical order: Aave (AAVE), Bancor (BNT), Compound (COMP), Curve (CRV), Loopring (LRC), Maker DAO Token (MKR), SushiSwap (SUSHI), Uniswap (UNI), Yearn Finance (YFI), and 0x (ZRX). (1) “Market Cap” refers to total DeFi sector market
capitalization, with data from CoinGecko. (2) “TVL” refers to total DeFi sector value locked, with data from The Block and DeFi Llama. (3) “Revenue” refers to 20 of the leading DeFi protocols tracked by The Block. (4) “DEX Trading Volume” refers to the major decentralized exchanges tracked by The
Block and CoinGecko. (5) “Stablecoin supply” refers to all major stablecoins tracked by The Block.
Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index. Index performance does not include the fees and expenses that are charged by any Fund. Fund returns may differ materially from the returns of the Index. Past performance is no
guarantee of future results. Please refer to additional important disclosures at the back of this document.

DEFI
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 24

Key Takeaway #1: Blue-chip DeFi protocols showed staying power through a major sell-off, while
centralized crypto companies (“CeFi”) lost billions in customer funds due to poor risk management.

COMPANY / PROTOCOL CEFI / DEFI REDEMPTIONS & WITHDRAWALS CUSTOMER FUNDS LOST CURRENT STATUS

Bailed out by FTX via credit agreement with

$80 million of assets lost through high-risk
BLOCKFI CeFi ✕ Implemented fees for customer withdrawals ✕ loans ✕ option to acquire BlockFi at massive discount
to prior funding round

$530 million of customer funds lost through

CELSIUS CeFi ✕ Froze all swaps, transfers and withdrawals ✕ high-risk loans
✕ Filed for Chapter 11 bankruptcy

$670 million of customer funds lost through

VOYAGER CeFi ✕ Froze all trading, deposits and withdrawals ✕ high-risk loans
✕ Filed for Chapter 11 bankruptcy

AAVE DeFi ✓ Zero assets or activities frozen ✓ Zero customer funds lost ✓ Functioning normally

COMPOUND DeFi ✓ Zero assets or activities frozen ✓ Zero customer funds lost ✓ Functioning normally

MAKER DeFi ✓ Zero assets or activities frozen ✓ Zero customer funds lost ✓ Functioning normally

Source: Bitwise Asset Management as of June 30, 2022.

DEFI
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 25

Key Takeaway #2: Uniswap nearly topped Coinbase’s trading volume in June, showcasing the growing
importance of decentralized exchanges.

Uniswap vs. Coinbase: Relative Share of Trading Volume From January 2019 to June 2022 (%) The leading decentralized exchange is
close to flipping Coinbase in trading
volume. Uniswap’s $50 billion of trading
volume in June was 18% shy of
Coinbase’s $59 billion.

One key driver behind Uniswap’s

growth this quarter is lower fees.
Scaling solutions like Arbitrum and
Polygon allow Uniswap to compete with
centralized exchanges.

Uniswap operated with zero downtime

through an extremely volatile quarter.
In total, it processed more than $208
billion of trading volume without halting
any user activities or experiencing any
liquidity concerns.

Source: Bitwise Asset Management with data from The Block and CoinGecko as of June 30, 2022.

DEFI
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 26

Key Takeaway #3: Despite the worst quarter in crypto's history, stablecoin AUM hovers near all-time
high; total supply exceeds $140 billion.

Total Circulating Supply of Stablecoins by Type From January 2017 to June 2022 (USD billions) Fiat-backed stablecoins dominate with
Collapse of algorithmic stablecoin 92% market share. Meanwhile,
TerraUSD leads to a ~$20B drop in algorithmic stablecoins represent less
stablecoin supply.
than 3% of the market following the
collapse of TerraUSD.
Algorithmic stablecoins see parabolic
growth led by TerraUSD; market
Stablecoin use is surging. Last
share jumps to 15%.
quarter's $2.0 trillion in stablecoin
transactions is the highest on record.

Regulators and central bankers are

exploring stablecoin technology. 90%
Fiat-collateralized stablecoins of central banks are researching the idea
dominate through rise of DeFi; total
of a central bank digital currency
supply exceeds $25B.
Stablecoins gain traction amid first (CBDC).1
major crypto bull market; total supply
surpasses $1B.

Source: Bitwise Asset Management with data from Coin Metrics and CoinGecko as of June 30, 2022.
Note: (1) Howard Schneider, “A coming crypto storm for central banks? Focus on digital money intensifies,” Reuters, June 2, 2022.

DEFI
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 27

Performance of the Top 10 DeFi Assets

CUMULATIVE RETURNS

MARKET CAP
ASSET DESCRIPTION TICKER PRICE 1 MONTH 3 MONTHS YTD 1 YEAR 3 YEARS
(USD BILLIONS)

Uniswap Leading decentralized exchange for trading assets UNI $4.82 $3.655 -14.30% -57.12% -71.37% -73.10% –

Maker Lending app supporting the DAI stablecoin MKR $869.23 $0.882 -33.95% -58.14% -62.26% -61.56% –

Aave Leading platform for lending and borrowing AAVE $54.83 $0.793 -51.29% -73.68% -78.10% -75.14% –

Loopring Decentralized exchange with built-in Layer 2 LRC $0.37 $0.511 -31.54% -67.83% -81.09% 28.00% 561.05%

Curve Leading decentralized exchange for stablecoins CRV $0.66 $0.367 -51.75% -75.02% -87.30% -59.60% –

Compound Lending app that pioneered governance tokens COMP $44.94 $0.336 -27.74% -69.57% -76.85% -85.26% –

0x Trading app that routes through other exchanges ZRX $0.33 $0.278 -20.13% -57.21% -57.53% -53.28% 1.72%

Yearn Finance Pioneers of automated asset management YFI $5,217.61 $0.197 -34.81% -76.98% -83.29% -83.70% –

SushiSwap Trading platform with a suite of products SUSHI $0.96 $0.126 -47.24% -77.92% -89.74% -87.33% –

Bancor First decentralized exchange for trading assets BNT $0.47 $0.114 -64.45% -82.35% -85.25% -84.99% -38.62%

Source: Bitwise Asset Management with data from CoinMarketCap as of June 30, 2022.
Note: Three-year returns are available only for assets with sufficient history.
Past performance is no guarantee of future results.

DEFI
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 28

05
NFTs
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 29

Q2 2022 Review: NFT markets tumbled as speculative trading slowed. But new use cases are
emerging, with consumers, brands and entrepreneurs embracing NFTs.

Performance of the Bitwise Blue-Chip NFT Collections Index, Its Constituents, and the Bitwise 10 Index From March 31 to June 30, 2022 (%) Key Performance Indicators
For the quarter ending June 30, 2022

MARKET CAP (TOP 10 COLLECTIONS)

-74.69% QoQ
$2.51 billion

TRADING VOLUME
-61.34% QoQ
$13.95 billion

MEDIAN DAILY TRANSACTIONS

-26.68% QoQ
148,850

MEDIAN DAILY TRADERS

-17.94% QoQ
49,982

OPENSEA DOMINANCE
+34.24 pp QoQ
63.98% of NFT trading volume

Source: Bitwise Asset Management. NFT Key Performance Indicators data from @hildobby via Dune Analytics, The Block and CryptoSlam as of June 30, 2022.
Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index. Index performance does not include the fees and expenses that are charged by any Fund.
Fund returns may differ materially from the returns of the Index. Past performance is no guarantee of future results. Please refer to additional important disclosures at the back of this document.

NFTs
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 30

Key Takeaway #1: Speculative trading of NFTs fell in Q2, while new use cases like domain names,
music, and gaming gained traction.

Ethereum Name Service (.eth) Registrations From Q3 2019 to Q2 2022 (thousands) Users registered a record number of
“.eth” names. Ethereum domain names
are like “.com” web domains, but
designed for Ethereum and Web3 using
NFT technology.

Music NFTs gained significant

popularity in Q2, offering a new
Ethereum Name Service (or “ENS”) is the most widely integrated blockchain naming standard, wIth
more than 1.7 million “.eth” names registered and 500+ integrations with crypto applications to date.
medium for artists and fans to
connect. Music NFTs allow users to
collect and earn a portion of the royalty
payments from their favorite songs, along
with other uses.

Gaming studios are betting big on

NFTs. One indicator from Q2: Epic
Games raised $2 billion from Sony and
others to build Metaverse games.

Source: Bitwise Asset Management with data from Ethereum Name Service and Dune Analytics as of June 30, 2022.

NFTs
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 31

Key Takeaway #2: NFTs opened a portal to revenues in the Metaverse for major brands.

JAN 2022 FEB 2022 MAR 2022 APR 2022 MAY 2022 JUN 2022

Decentraland hosts
UFC partners with JPMorgan Chase NFT studio RTFKT and Coca-Cola releases Retail gaming giant
first ever Metaverse
Dapper Labs to launch becomes first U.S. Nike reveal Zero Sugar Byte, a GameStop launches
Fashion Week
UFC Strike, a series of bank to enter the CryptoKicks, new limited-edition NFT marketplace
with brands like
collectible NFTs Metaverse, opening a a new collection of “pixel-flavored soda” powered by NFT
Dolce & Gabbana,
consisting of the most virtual lounge in customizable NFT that was “born in the scaling-solutions
Estée Lauder,
epic fight moments. Decentraland. sneakers. metaverse.” provider, Immutable X.
and DKNY.

Source: Bitwise Asset Management.

NFTs
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 32

Key Takeaway #3: Yuga Labs, creator of the Bored Ape Yacht Club, raised $450m at a $4.5b
valuation in Q2. Why? Because they’ve started to show that NFTs are “more than just JPEGs.”

EST. FEB 2021

INTELLECTUAL PROPERTIES & THE METAVERSE UTILITY & ECOSYSTEM DEVELOPMENT

APR 2021 JUN 2021 SEP 2021 DEC 2021 MAR 2022

Bored Ape Yacht Club (BAYC) Bored Ape Kennel Club Mutant Serum Adidas X BAYC ApeCoin DAO launches $APE
Launches These exclusive canine 10,000 Mutant Apes can be generated Adidas kicks off a four-way NFT ApeCoin DAO, an independent entity,
One of the first NFT projects to companion NFTs are launched by applying an NFT “Serum” to a collaboration as part of its strategy launches $APE, the go-to currency for
grant holders with full IP rights to reward BAYC holders Bored Ape to enter the Metaverse the BAYC ecosystem

SEP 2021 MAR 2022 APR 2022 APR 2022 JUN 2022

Mutant Ape Yacht Club CryptoPunks and Meebits Otherside Metaverse Raises $450M at $4.5B valuation Rolling Stone X BAYC
BAYC holders receive free Yuga Labs acquires IP rights ApeCoin-powered Metaverse project First fundraising round led by a16z Second collaboration for NFT collection
Mutant Ape NFT from Larva Labs releases NFT virtual lands "Otherdeeds"

Source: Bitwise Asset Management, Yuga Labs.

NFTs
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 33

Performance of the Top 10 Art & Collectibles NFT Collections

CUMULATIVE RETURNS

ITEMS IN MARKET CAP

ASSET DESCRIPTION FLOOR PRICE 1 MONTH 3 MONTHS YTD
COLLECTION (USD MILLIONS)

Bored Ape Yacht Club Pioneers of community engagement on- and offline 10,000 $92,271.79 $867.508 -46.95% -70.85% -58.68%

Crypto Punks Original and most iconic NFT collection 10,000 $67,241.16 $672.412 -27.04% -70.29% -71.79%

Mutant Ape Yacht Club Collection of “mutated” ape avatars 19,423 $18,148.48 $352.498 -46.71% -75.97% -56.68%

CloneX Customizable avatar wearables for the Metaverse 19,326 $11,215.36 $222.659 -54.98% -78.77% -27.38%

Meebits Three-dimensional pixelated avatars with audio 20,000 $4,184.86 $97.417 -45.87% -75.26% -62.36%

Chromie Squiggle First collection released on Art Blocks platform 9,675 $9,991.86 $96.671 -13.83% -56.97% -60.84%

VeeFriends NFT collection by entrepreneur Gary Vaynerchuk 10,255 $8,258.58 $84.692 -46.52% -80.96% -75.77%

Autoglyphs First fully “on-chain” generative art collection 512 $101,957.80 $52.202 -68.78% -82.47% -81.75%

Cool Cats Randomly generated and stylistically curated NFTs 9,941 $3,996.75 $39.732 -52.89% -86.00% -87.68%

Cyberkongz Genesis Pixelated avatars valued for their utility 1,000 $19,881.77 $24.470 -53.22% -89.38% -89.71%

Source: Bitwise Asset Management with data from nftpricefloor.com as of June 30, 2022.
Note: Top 10 selection based on Bitwise Blue Chip NFT Collections Index methodology. Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index. Index performance does not include the fees and expenses that are charged by any
Fund. Fund returns may differ materially from the returns of the Index. Past performance is no guarantee of future results. Please refer to additional important disclosures at the back of this document.

NFTs
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 34

06
CRYPTO
EQUITIES
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 35

Q2 2022 Review: Crypto equities fell sharply with the crypto bear market, as their correlation to
crypto assets remained high.
Performance of the Bitwise Crypto Innovators 30 Index, Its Top 10 Constituents, and the Bitwise 10 Index From March 31 to June 30, 2022 (%) Key Performance Indicators
For the quarter ending June 30, 2022

MARKET CAP (TOP CRYPTO EQUITIES1)

-73.58% QoQ
$20.16 billion

TRADING VOLUME
-4.63% QoQ
$120.98 billion

REVENUE - LAST REPORTED

-38.65% QoQ
$2.25 billion

NET INCOME - LAST REPORTED

-202.74% QoQ
-$987.48 million

PRICE-TO-BOOK RATIO - LAST REPORTED

-69.28% QoQ
1.32x

Source: Bitwise Asset Management with data from IEXCloud and FactSet as of June 30, 2022. Note: (1) Crypto equities refer to Tier 1 constituents of the Bitwise Crypto Innovators 30 Index.
Tickers refer to the following crypto equities (in alphabetical order: Bakkt Holdings (BKKT), Bit Digital (BTBT), Canaan (CAN), Coinbase (COIN), Galaxy Digital Holdings (GLXY-CT), Marathon Digital Holdings (MARA), MicroStrategy (MSTR), Norther Data AG (NB2-GB), Riot Blockchain (RIOT), Silvergate
Capital (SI). Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index. Index performance does not include the fees and expenses that are charged by any Fund. Fund returns may differ materially from the returns of the Index. Past performance
is no guarantee of future results. Please refer to additional important disclosures at the back of this document.

CRYPTO EQUITIES
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 36

Key Takeaway #1: While lower bitcoin prices pressured mining profitability, most listed players
maintained a low cost structure that allowed them to operate at a healthy profit.

Miners' Direct Cash Cost to Mine One Bitcoin in Q1 2022 Compared to Bitcoin Price (green line) as of June 30, 2022 While bitcoin mining revenues track
the price of bitcoin, their costs are
denominated in USD. As bitcoin’s price
dropped 57.27% during the quarter,
mining profitability has been dramatically
curtailed.

Most miners remain profitable even at

current bitcoin prices. Public miners’
direct cash costs to mine a bitcoin are in
many cases under $10,000, well below
current bitcoin prices, giving them
cushion to keep operating profitably.

As high-cost miners turn off their

operations, the low-cost ones can
increase market share. This is a big
opportunity for listed bitcoin miners, as
many of them are among the most
efficient operators in the industry.

Source: Bitwise Asset Management with data from companies as of Q1 2022. Bitcoin price as of June 30, 2022.

CRYPTO EQUITIES
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 37

Key Takeaway #2: Coinbase’s revenues are leveraged to the underlying crypto asset price cycle. As a
result, the company quickly joined the industry in cutting expenses to protect profitability.

Coinbase’s (COIN) Operating Expenses From Q1 2020 to Q1 2022 by Segment (USD billions) Coinbase, along with its competitors,
invested heavily to support its growing
operations until Q1. As an example,
administrative and technology
development expenses amounted to
36% and 49% of revenues, respectively.
The company hired over 1,200
employees in Q1 alone.

Amidst the new market environment,

expense control is now taking the front
seat. In June, citing that the company
had grown too quickly, Coinbase’s
management instituted first a hiring
freeze and then executed significant
layoffs, cutting its total workforce by
1,100 employees (~18%). Some of their
non-listed peers such as Gemini,
Blockchain.com, Bullish, and OpenSea
have also followed suit.

Source: Bitwise Asset Management with data from Coinbase as of Q1 2022.

CRYPTO EQUITIES
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 38

Key Takeaway #3: Crypto equities are significantly less leveraged than other traditional major
industries. There are, however, a few pockets of leverage that require attention.

Median Net Debt to Shareholders’ Equity Ratio (Last Reported) of Each Sector of the S&P 500 Index and the Bitwise Crypto Innovators 30 Index Crypto equities in general have lower
leverage relative to traditional
companies. Crypto equities have a
negative net debt to equity ratio of about
7% as most of them raised capital
recently and have been profitable over
the last 12-18 months. If they were a
sector of the S&P 500 index, they would
have the lowest leverage by a wide
margin.

There are, however, a few companies

or segments that demand attention.
Voyager Digital filed for bankruptcy due
to exposure to embattled crypto hedge
fund 3AC. Bitcoin miners, although
mostly not carrying a lot of debt, have
lines of credit secured by bitcoin and
capex commitments with equipment
providers that might be harder to honor.
Some have been selling bitcoin from their
reserves to shore up their balance sheets.

Source: Bitwise Asset Management with data from Bloomberg.

CRYPTO EQUITIES
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 39

Performance of the Top 10 Constituents in the Bitwise Crypto Innovators 30 Index

CUMULATIVE RETURNS

MARKET CAP
ASSET DESCRIPTION TICKER PRICE 1 MONTH 3 MONTHS YTD 1 YEAR 3 YEARS
(USD MILLIONS)

Coinbase Most established crypto exchange platform COIN $47.02 $10,439.219 -39.80% -75.23% -81.37% -80.94% –

MicroStrategy Bitcoin proxy via its BTC treasury holdings MSTR $164.30 $1,856.183 -37.93% -66.22% -69.82% -73.68% 14.65%

Silvergate Capital Most established crypto and fintech bank SI $53.53 $1,693.358 -31.81% -64.45% -63.88% -50.57% –

Crypto financial services and investment

Galaxy Digital Holdings GLXY CN $4.83 $1,239.952 -40.59% -77.32% -78.68% -78.54% –
management

Marathon Digital Holdings Leading U.S. crypto miner MARA $5.34 $567.688 -47.80% -80.89% -83.75% -82.27% 84.78%

Bakkt Holdings Crypto trading and rewards platform BKKT $2.10 $563.976 -26.32% -65.91% -75.32% – –

Canaan Crypto mining rig manufacturer CAN $3.22 $541.749 -13.90% -40.70% -37.48% -59.50% –

Northern Data B2B crypto data center provider NB2 GR $22.26 $540.285 -35.37% -61.55% -70.40% -71.96% 34.91%

Riot Blockchain Leading U.S. crypto miner RIOT $4.19 $532.269 -41.72% -80.21% -81.24% -88.42% 33.44%

Bit Digital Sustainability-focused crypto miner BTBT $1.31 $105.315 -26.40% -63.61% -78.45% -81.58% -62.14%

Source: Bitwise Asset Management with data from IEXCloud and FactSet as of June 30, 2022.
Note: One-year and three-year returns are available only for assets with sufficient history. Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index. Index performance does not include the fees and expenses that are charged by any Fund.
Fund returns may differ materially from the returns of the Index. Past performance is no guarantee of future results. Please refer to additional important disclosures at the back of this document.

CRYPTO EQUITIES
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 40

07
CRYPTO
FUNDAMENTALS
GUIDE
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 41

Overall crypto market: Market capitalization and dominance

Crypto Assets Total Market Capitalization From June 2013 to June 2022 (USD trillions) Bitcoin and Ethereum Dominance From June 2021 to June 2022 (%)

Source: Bitwise Asset Management with data from The Block and CoinGecko as of June 30, 2022. Source: Bitwise Asset Management with data from The Block and CoinMarketCap as of June 30, 2022

OVERALL CRYPTO MARKET

 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 42

Bitcoin: Select on-chain indicators

Bitcoin Held, by Length of Holding, From January 2020 to June 2022 (millions) Number of Entities Holding Bitcoin by Profile From January 2020 to June 2022 (millions)

Source: Bitwise Asset Management with data from Chainalysis as of June 30, 2022.
Source: Bitwise Asset Management with data from Chainalysis as of June 30, 2022.

Top 10 Net Receivers (Positive Values) and Top 10 Net Senders (Negative Values) From
Share of Bitcoin Supply in Profit or Loss From January 2020 to June 2022 (%)
January 2020 to June 2022 (USD millions)

Source: Bitwise Asset Management with data from Chainalysis as of June 30, 2022. Source: Bitwise Asset Management with data from Chainalysis as of June 30, 2022.

BITCOIN
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 43

Bitcoin: Liquidity and on-chain flows

Total Spot Trading Volume in Select Exchanges From June 2020 to June 2022 (USD billions) Total Futures Contracts Trading Volume From June 2020 to June 2022 (USD billions)

Source: Bitwise Asset Management with data from The Block and Cryptocompare as of June 30, 2022. Source: Bitwise Asset Management with data from The Block and Coinglass as of June 30, 2022.

Inflows/Outflows From Miners to Exchanges (1 Hop) From June 2020 to June 2022, 60-Day
Inflows/Outflows to Spot Exchanges From June 2020 to June 2022, 60-Day Moving Average
Moving Average

Source: Bitwise Asset Management with data from Coin Metrics as of June 30, 2022. Source: Bitwise Asset Management with data from Coin Metrics as of June 30, 2022.

BITCOIN
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 44

Bitcoin: Key network operational statistics

Total Bitcoin Active Addresses From January 2018 to June 2022, 60-Day Moving Average Total Bitcoin Hash Rate From January 2018 to June 2022 (EH/s)
(millions)

Source: Bitwise Asset Management with data from Coin Metrics as of June 30, 2022. Source: Bitwise Asset Management with data from Coin Metrics as of June 30, 2022.

Median Transaction Fees in USD From January 2018 to June 2022, 30-Day Moving Average (USD) Total Bitcoin Locked in Public Lightning Channels From January 2020 to June 2022 (BTC)

Source: Bitwise Asset Management with data from Coin Metrics as of June 30, 2022. Source: Bitwise Asset Management with data from The Block and Bitcoin Visuals as of June 30, 2022.

BITCOIN
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 45

Ethereum and emerging L1s: TVL in DeFi and NFT trading volume by blockchain

Market Share of DeFi Total Value Locked by Blockchain From January 2020 to June 2022 (%) Market Share of NFT Trading Volume by Blockchain From January 2021 to June 2022 (%)

Source: Bitwise Asset Management with data from The Block and DeFi Llama as of June 30, 2022. Source: Bitwise Asset Management with data from The Block and CryptoSlam as of June 30, 2022.

ETHEREUM AND EMERGING LAYER 1s

 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 46

Ethereum and emerging L1s: Select operational indicators for Ethereum L2 solutions

Total Value Locked (TVL) on Ethereum's Scalability Solutions From June 2021 to June 2022 (USD billions)

Source: Bitwise Asset Management with data from @eliasimos via Dune Analytics as of June 30, 2022.

Share of Daily Transactions on Ethereum and Its Top Scaling Solutions From April to June 2022 (%) Average Fee Per Transaction on Ethereum and Its Top Scaling Solutions on June 30, 2022 (USD)
NETWORK LAYER 1 VS. LAYER 2 AVERAGE FEE PER TRANSACTION

Ethereum Layer 1 $3.61

Arbitrum Layer 2 $0.27

Optimism Layer 2 $0.21

Polygon Layer 2 Aggregator $0.01

Source: Bitwise Asset Management with data from Etherscan, Polygonscan, Arbiscan, and Optimism as of June 30, 2022. Source: Bitwise Asset Management with data from CryptoFees.info, Etherscan, Optimistic.etherscan.io, and Arbiscan.io as of June 30, 2022.

ETHEREUM AND EMERGING LAYER 1s

 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 47

Ethereum and emerging L1s: Total value locked (TVL) by L2 scaling solution

Total Value Locked in Ethereum Scaling Solutions by Technology Type From July 2021 to June 2022 (USD billions)

Source: Bitwise Asset Management with data from The Block and Zerion as of June 30, 2022.

Total Value Locked in Optimistic Rollups by Layer 2 From July 2021 to June 2022 (USD billions) Total Value Locked in ZK-Rollups by Layer 2 From July 2021 to June 2022 (USD billions)

Source: Bitwise Asset Management with data from The Block and Zerion as of June 30, 2022.

Source: Bitwise Asset Management with data from The Block and Zerion as of June 30, 2022. Source: Bitwise Asset Management with data from The Block and Zerion as of June 30, 2022.

ETHEREUM AND EMERGING LAYER 1s

 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 48

DeFi: Total value locked (TVL) and revenue of the leading projects
Total Value Locked (TVL) in DeFi by Sector From January 2020 to June 2022 (USD billions) Revenue Generated by DeFi Applications From July 2020 to June 2022 (USD millions)

Source: Bitwise Asset Management with data from The Block and Defi Llama as of June 30, 2022. Source: Bitwise Asset Management with data from The Block and CryptoFees.info as of June 30, 2022.

Relative Share of Total Value Locked (TVL) in DeFi by Blockchain From January 2020 to June 2022
Relative Share of DeFi Revenue on Leading DeFi Applications From July 2020 to June 2022 (%)
(%)

Source: Bitwise Asset Management with data from The Block and Defi Llama as of June 30, 2022. Source: Bitwise Asset Management with data from The Block and CryptoFees.info as of June 30, 2022.

DEFI
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 49

DeFi: Activity indicators for the top trading and lending applications
Trading Volume by Decentralized Exchange From January 2020 to June 2022 (USD billions) Deposits and Loans on Aave, Compound and Maker From January 2020 to June 2022 (USD
billions)

Source: Bitwise Asset Management with data from The Block and CoinGecko as of June 30, 2022. Source: Bitwise Asset Management with data from Dune Analytics as of June 30, 2022.

Share of Trading Volume on Leading Crypto Exchanges From January 2020 to June 2022 (%) Liquidations Across Lending Protocols From January 2020 to June 2022 (USD billions)

Source: Bitwise Asset Management with data from The Block, CoinGecko and DeBank as of June 30, 2022.

Source: Bitwise Asset Management with data from The Block, CoinGecko and CryptoCompare as of June 30, 2022. Source: Bitwise Asset Management with data from The Block, Parsec and Flipside as of June 30, 2022.

DEFI
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DeFi: Total supply and transfer volume for stablecoins

Total Circulating Supply of Stablecoins by Type From January 2017 to June 2022 (USD billions) Value of Stablecoin Transfers From January 2017 to June 2022 (USD trillions)

Source: Bitwise Asset Management with data from The Block and Coin Metrics as of June 30, 2022. Source: Bitwise Asset Management with data from Coin Metrics and CoinGecko as of June 30, 2022.

DEFI
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NFTs: Trading volume by category and marketplace

Trading Volume of NFTs by Category From January 2021 to June 2022 (USD billions) Trading Volume on NFT Marketplaces From January 2021 to June 2022 (USD billions)

Source: Bitwise Asset Management with data from The Block and CryptoSlam as of June 30, 2022. Source: Bitwise Asset Management with data from The Block and CryptoSlam as of June 30, 2022.

NFTs
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NFTs: Trading volume and sales of the leading art and collectibles projects

Art and Collectibles: Trading Volume by Project From January 2021 to June 2022 (USD billions) Art and Collectibles: Number of Sales by Project From January 2021 to June 2022 (thousands)

Source: Bitwise Asset Management with data from The Block and CryptoSlam as of June 30, 2022. Source: Bitwise Asset Management with data from The Block and CryptoSlam as of June 30, 2022.

NFTs
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NFTs: Trading volume and sales of the leading gaming projects

Gaming NFTs: Trading Volume by Game From January 2021 to June 2022 (USD millions) Gaming NFTs: Number of Sales by Game From January 2021 to June 2022 (thousands)

Source: Bitwise Asset Management with data from The Block and CryptoSlam as of June 30, 2022. Source: Bitwise Asset Management with data from The Block and CryptoSlam as of June 30, 2022.

NFTs
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Crypto Equities: Key financial highlights for select companies

2022 Median Revenue Growth Estimates of Select Constituents of the Bitwise Crypto Innovators 2022 Median Profit Margin Estimates of Select Constituents of the Bitwise Crypto Innovators 30
30 Index as of June 30, 2022 (%) Index as of June 30, 2022 (%)

Source: Bitwise Asset Management with data from FactSet as of June 30, 2022. Source: Bitwise Asset Management with data from FactSet as of June 30, 2022.

Price-to-Equity Ratios of Select Constituents of the Bitwise Crypto Innovators 30 Index as of Price-to-Book Ratios of Select Constituents of the Bitwise Crypto Innovators 30 Index as of June
June 30, 2022 30, 2022

Source: Bitwise Asset Management with data from FactSet as of June 30, 2022. Source: Bitwise Asset Management with data from FactSet as of June 30, 2022.

CRYPTO EQUITIES
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Crypto Equities: Industry highlights and key company metrics for miners
Share of Bitcoin Network Hash Rate by Country From September 2019 to January 2022 (%) Total Mining Revenues by Type From January 2020 to June 2022 (USD millions)

Source: Bitwise Asset Management with data from the Cambridge Centre for Alternative Finance. Source: Bitwise Asset Management with data from Coin Metrics as of June 30, 2022.

Current and Projected Hashrate From June 30, 2022 (EH/s) Bitcoin Miner Leverage Ratios From January to March 2022

Source: Bitwise Asset Management with data from companies as of June 30, 2022. Note: MARA guidance projected to be
achieved in early 2023, RIOT for January 2023 and all remaining miner guidance by end of 2022. Source: Bitwise Asset Management with data from companies as of 1Q 2022.

CRYPTO EQUITIES
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Crypto Equities: Key financial and operational highlights for Coinbase

Coinbase Revenue by Type From Q1 2020 to Q1 2022 (USD billions) Coinbase Quarterly Transacting Users From Q1 2020 to Q1 2022 (millions)

Source: Bitwise Asset Management with data from Coinbase as of 1Q 2022. Source: Bitwise Asset Management with data from The Block as of June 30, 2022.

Coinbase Volume by Customer Segment From Q1 2020 to Q1 2022 (USD billions) Coinbase Trade Volume Share by Crypto Asset From Q1 2020 to Q1 2022 (%)

Source: Bitwise Asset Management with data from The Block as of June 30, 2022. Source: Bitwise Asset Management with data from The Block as of June 30, 2022.

CRYPTO EQUITIES
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Important Disclosures

The opinions expressed herein are intended to provide insight or education and are not intended as individual investment advice. Bitwise does not represent that
this information is accurate and complete and should not be relied upon as such. Certain of the Bitwise Investment products may be subject to the risks associated
with investing in crypto assets, including cryptocurrencies and crypto tokens. Because crypto assets are a new technological innovation with a limited history, they
are a highly speculative asset. Future regulatory actions or policies may limit the ability to sell, exchange or use a crypto asset. The price of a crypto asset may be
impacted by the transactions of a small number of holders of such crypto asset. Crypto assets may decline in popularity, acceptance or use, which may impact
their price. The technology relating to crypto assets and blockchain is new and developing. Currently there are a limited number of publicly listed or quoted
companies for which crypto assets and blockchain technology represent an attributable and significant revenue stream. Non-Fungible Tokens ("NFTs") are an
extremely new artistic and cultural phenomenon, and interest in such artwork could wane. If the demand for NFT artwork diminishes, the prices of NFT items could
be negatively affected. The market for NFTs can be subject to shallow trade volume, extreme hoarding, low liquidity and high bankruptcy risk. NFTs are also
subject to risks and challenges associated with intellectual property rights and fraud. Bitwise investment products involve a substantial degree of risk and are
available only to institutional and individual accredited investors.

The information in this material is for discussion purposes only and no representations or warranties are given or implied. The information contained in this
Presentation is subject to further discussion, completion, and amendment. This material represents an assessment of the market environment at a specific time
and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or
investment advice regarding the funds or any security in particular. All of the information presented herein is subject to change without notice.
 Crypto Market Quarterly Review | Q2 2022 | bitwiseinvestments.com 58

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