Bitwise Shifts Focus to Spot Bitcoin ETF as Futures ETF Application Withdrawn

In a surprising turn of events amidst the buzz around newly launched Bitcoin futures ETFs, Bitwise Asset Management has withdrawn its application for a Bitcoin (BTC) futures ETF. But before you jump to conclusions, it’s not a step back from crypto for Bitwise – quite the opposite! They are doubling down on their pursuit of something many crypto enthusiasts consider the ‘holy grail’: a spot Bitcoin ETF.

Why Did Bitwise Withdraw its Futures ETF Application?

With several Bitcoin futures ETFs already trading in the United States, you might be wondering why Bitwise decided to pull back their application. According to Matt Hougan, Bitwise’s CIO, announced on November 10th, this move isn’t a retreat, but rather a strategic pivot. Bitwise remains firmly bullish on bringing a Bitcoin ETF to the market, but their focus is laser-sharp on a spot Bitcoin ETF – one that directly tracks the price of Bitcoin itself.

Here’s the crux of the matter, according to Hougan:

• Investor Preference: Bitwise believes that ultimately, most investors are seeking a spot Bitcoin ETF. This type of ETF is seen as a more direct and transparent way to gain exposure to Bitcoin’s price movements.
• Unwavering Commitment: The withdrawal of the futures ETF application doesn’t diminish Bitwise’s commitment to the crypto space. Hougan explicitly stated that their spot Bitcoin ETF filing remains active, and they will continue to push for its approval.
• Broader Crypto Vision: Bitwise is dedicated to finding various avenues to help investors access the “incredible opportunities in crypto.” This suggests a long-term vision that extends beyond just ETFs.

In essence, Bitwise seems to be prioritizing what they believe is the ultimate product for investors – a spot Bitcoin ETF – rather than competing in the already crowded futures ETF space.

The Quest for a Spot Bitcoin ETF: A Long and Winding Road

The dream of a spot Bitcoin ETF in the US is not new. In fact, the very first application for a Bitcoin ETF was a spot ETF, filed way back in 2013 by none other than Cameron and Tyler Winklevoss, the founders of the Gemini crypto exchange.

Think about that – 2013! That’s almost a decade ago. Hougan himself acknowledged the long journey, stating, “For years, many have worked on this, including the team here.”

Unfortunately for the Winklevoss twins and the crypto community at the time, their pioneering spot Bitcoin ETF application was denied by the U.S. Securities and Exchange Commission (SEC) in 2017. The SEC has consistently expressed concerns about market manipulation and investor protection in the largely unregulated spot Bitcoin market. These concerns have been the primary hurdle for spot Bitcoin ETF approvals.

Futures ETF Approval: A Step Forward, But Not the Destination?

Matt Hougan recognizes the significance of the recent SEC approvals for Bitcoin futures ETFs, stating that “any ETF is a big step.” The launch of these futures-based ETFs in October indeed marked a milestone, offering investors indirect exposure to Bitcoin through regulated investment vehicles.

However, for many, including Bitwise, futures ETFs are seen as an interim step, not the final destination. Here’s why spot Bitcoin ETFs are often preferred:

• Direct Exposure: Spot ETFs hold actual Bitcoin, providing investors with a direct claim on the underlying asset. Futures ETFs, on the other hand, invest in Bitcoin futures contracts, which are agreements to buy or sell Bitcoin at a future date. This introduces complexities and potential tracking errors.
• Simplicity and Transparency: Spot ETFs are generally considered simpler to understand and more transparent in their operation compared to futures-based products.
• Potential for Lower Costs: While ETF fees vary, some argue that spot ETFs could potentially have lower overall costs for investors in the long run compared to futures ETFs due to the nuances of futures contract rollovers and management.

What Does This Mean for the Future of Bitcoin ETFs?

Bitwise’s decision to refocus on a spot Bitcoin ETF signals a continued strong belief in the demand and viability of such a product. Despite the SEC’s historical reluctance, the increasing maturity of the crypto market and the approval of futures ETFs could pave the way for a spot Bitcoin ETF in the future.

While the path forward remains uncertain, Bitwise’s unwavering pursuit, along with efforts from other firms, keeps the hope alive for a spot Bitcoin ETF that could potentially open up Bitcoin investment to a broader range of investors.

For now, the crypto world watches and waits, as the quest for the first spot Bitcoin ETF in the US continues. And Bitwise, it seems, is determined to be at the forefront of that quest.

Galaxy Interactive Rises Additional $325M Fund For Metaverse and Next Gen…>>