Bitwise Makes U-Turn, Retracts Bitcoin ETF Application; Here’s Why
Foremost asset manager Bitwise has taken an unusual step by formally withdrawing its application for the Bitcoin (BTC) and Ethereum (ETH) exchange-traded fund (ETF). The application, alongside that of other top asset managers, was initially filed with the US Securities and Exchange Commission (SEC) on August 3.
Reassessing Investment Strategies
Despite Grayscale’s victory over the SEC victory, which has boosted market sentiment regarding spot BTC ETF approval, Bitwise claimed it is reconsidering its long-term strategy. The asset manager’s decision to withdraw the ETF application was unexpected.
However, one notable statement in the filing indicates that the Fund aims to offer investors capital appreciation. Hence, the asset manager might have withdrawn its application since it is not guaranteed to achieve this investment objective.
In a recent interview, the Fund’s Chief Investment Officer, Matt Hougan, advocated for the SEC’s approval of all ETF applications. The ETF was designed to invest in BTC or ETH futures contracts, with market capitalization dynamics to determine the choice.
Surprisingly, Bitwise collaborated with ProShares to launch another ETF when it filed for approval from the US regulator. Based on the withdrawal statement, Bitwise is no longer interested in pursuing the Fund’s goals.
Furthermore, it added that no Fund securities have been sold, nor will they be sold, as part of the previously mentioned Post-Effective Amendment to the firm’s Registration Statement. Meanwhile, the SEC has continued to drag its feet by extending the deadline for evaluating Bitcoin ETF applications from several prominent firms, like BlackRock, Fidelity, Invesco Galaxy, WisdomTree, Valkyrie, and VanEck.
According to the regulator’s statement dated August 31, the commission has extended the review period for spot Bitcoin ETF applications. The SEC’s decision has continued to leave the crypto community in anticipation of when the funds will be launched.
Part Of The Early Birds
Bitwise was one of the early asset management firms that attempted to usher in a new era of cryptocurrency investing. The firm took a significant step in this regard in January 2019 when it applied with the securities regulator.
The application aimed to introduce Bitcoin ETFs to the market, a decision that could transform how traditional investors interact with cryptocurrencies. This novel idea entailed monitoring the performance of the platform’s Bitcoin Total Return Index to leverage its value.
This index would derive value from several Bitcoin transactions occurring on various crypto exchanges. Also, it would provide investors with real-time data on the volatile and ever-changing value of Bitcoin, including a comprehensive view of the asset’s performance.
Moreover, Bitwise’s vision for its Bitcoin ETF goes beyond tracking the value of BTC. The proposed ETF was also intended to serve as an example of transparency and trust in the cryptocurrency space.
The firm intended to accomplish this by aggregating market data from multiple cryptocurrency exchanges. Meanwhile, the recent withdrawal of Bitwise’s Bitcoin ETF application was not its first interaction with the US financial regulator.
The asset manager had previously submitted an application for an Ethereum Strategy ETF in the same year. This innovative ETF was created to expose investors to both front-time and back-time Ethereum futures, allowing them to benefit from the Ethereum blockchain’s growth and evolution.
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