In a surprising move, Bitwise has requested to retract its application for the Bitcoin and Ethereum Market Cap Strategy Ethereum Futures Contracts (ETF), which was initially filed with the Securities and Exchange Commission (SEC) on Aug. 3.
A change in strategy
In the world of cryptocurrency, where market sentiment can shift in an instant, Bitwise appears to be quietly reevaluating its approach. The withdrawal of the Bitcoin and Ethereum Market Cap Strategy ETF came as a surprise, but the filing included a cautionary statement, "The fund seeks to provide investors with capital appreciation. There can be no assurance that the fund will achieve its investment objective."
Conflicting signals
The timing of this withdrawal application is rather peculiar. Just recently, Bitwise's Chief Investment Officer, Matt Hougan, expressed support for SEC approval of all ETFs in an interview with Bloomberg. The ETF in question was intended to invest in either Bitcoin Futures Contracts or Ethereum Futures Contracts, depending on their relative market capitalization. Interestingly, around the same time, Bitwise also collaborated with ProShares to launch another ETF.
Reconsidering their options
"The Trust no longer intends to seek effectiveness of the Fund and no securities of the Fund were sold, or will be sold, pursuant to the above-mentioned Post-Effective Amendment to the Trust’s Registration Statement."
In the withdrawal statement, Bitwise simply stated that they no longer intend to pursue the Fund's effectiveness. It remains unclear why they made this decision, but it may indicate a need for further evaluation and adjustment of their investment plans.
SEC delays decision
The SEC has recently delayed its decision on several Bitcoin exchange-traded fund (ETF) applications. The commission has extended the review period for spot Bitcoin ETF applications from WisdomTree, Invesco Galaxy, Valkyrie, VanEck, BlackRock, Bitwise, and Fidelity. The next set of deadlines for the SEC is in mid-October, although these may also face delays until January, March, April, or May of next year.
A history of proposals
Bitwise has been one of the early players in seeking SEC approval for Bitcoin ETF products. In January 2019, the company submitted an application for a BTC-backed ETF that would track the Bitwise Bitcoin Total Return Index. This index calculates the value of Bitcoin based on BTC transactions occurring on various exchanges.
The proposed Bitwise Bitcoin ETF aimed to gather market data from multiple cryptocurrency exchanges to provide trustworthy representation of the broader cryptocurrency markets. The company also planned to require third-party custodians to physically hold Bitcoin for their ETF.
Not their first withdrawal
This recent withdrawal is not the first time Bitwise has pulled an ETF application. Earlier this year, they filed for an Ethereum Strategy ETF, which aimed to invest in both front-time and back-time Ethereum Futures. However, just a week after submitting the application, Bitwise withdrew it.
