Some well-known PayPal veterans just invested in the world's first crypto index fund

Key Points
  • Bitwise Asset Management closes a $4 million funding round backed by investors including Keith Rabois, David Sacks and Naval Ravikant.
  • Bitwise's Hold 10 index fund, the world's first crypto-index fund, is now taking on investors.
  • Hold 10 is another way to get in on the cryptocurrency craze.
An application for Bitcoin in front of a window of the offices of the bank 'La Maison du Bitcoin' in Paris, France.
Chesnot | Getty Images

For people looking to get in on cryptocurrencies without having to bet on a single one, a new money management firm is trying to make crypto-investing as easy as buying the S&P 500.

Bitwise Asset Management has just started accepting investors into Hold 10, the world's first crypto-index fund, which lets people put money in the 10 largest cryptocurrencies as weighted by the total value of coins outstanding.

The fund was announced in October and is now open to accredited investors. On Tuesday, Bitwise also said it has raised $4 million from some of the best-known investors in financial technology, including Keith Rabois (through Khosla Ventures), David Sacks and Naval Ravikant.

"We and our investors believe that a vehicle like this, or passive index investing as an approach, is a great way for many people to participate in cryptocurrency," Bitwise CEO Hunter Horsley told CNBC.

The Hold 10 index is the latest investment vehicle to launch in the cryptocurrency space. Just this week, bitcoin started trading in the futures market, while dozens of actively managed hedge funds have opened this year. Initial coin offerings, which let investors buy and trade cryptocurrencies created by individual companies, have raised over $3.7 billion in 2017, according to CoinDesk.

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Horsley said there are benefits to an index fund. It costs less than a hedge fund and is easier to follow as it simply tracks an index of the top 10 coins. It also helps diversify the investment, while guaranteeing higher ownership of whatever cryptocurrency ends up being the most valuable, Horsley said.

Currently, about 60 percent of the index is weighted toward bitcoin.

There's been no better bet than bitcoin this year. The currency is up 17-fold, meaning someone who invested $59,000 at the beginning of 2017 would now hold $1 million worth of bitcoin.

Crypto "is such a new and volatile asset class, it's hard to guess how the market will play out in the future," Horsely said. "If you use subjective judgment, you could misjudge or overlook something."