Why Did Bitwise Withdraw Bitcoin Futures ETF?
Bitwise, the crypto index fund provider, has announced that it has withdrawn the Bitcoin Futures ETF in the US. Instead, the firm has said that it will focus on getting a spot-based ETF launched.
According to the company’s Chief Investment Officer Matt Hougan, the proposal for a futures-based ETF was withdrawn because of complexity issues and higher than expected costs associated with such a feature.
The announcement was made in a Twitter thread on Wednesday. In the thread, Hougan shed light on the firm’s decision to withdraw the ETF. He explained that initially, they thought that the benefits of the Bitcoin Futures ETF would outweigh the costs. The benefits were thought to be convenient and accessibility. However, the costs of contango were larger than initially expected.
Hougan added that they initially believed that it would be possible to also hold Bitcoin exchange-traded products (ETPs) in addition to Bitcoin Futures contracts as part of the ETF. This would have lowered the overall costs of managing the fund.
As a result, the firm has concluded that long-term Bitcoin investors “would be better served by spot exposure”. This is already available according to Hougan.
Hougan made clear that Bitwise has already filed for a spot-based Bitcoin ETF with the US SEC. The company now believes that it will be possible to get the spot-ETF approved, this is according to an analysis that the firm has conducted which concluded that the regulated market “is now the leading source of price discovery in the Bitcoin market.”
Hougan concluded his remarks by saying, “So Bitwise will continue to pursue that goal, and we will look for other ways to help investors get access to the incredible opportunities in crypto.” The new spot-ETF could be approved in the foreseeable future but no further details of its launch have been released.