Bitwise Withdraws Bitcoin Futures ETF Application, Will Focus on Spot Fund

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In Brief
  • CIO Matt Hougan announced the Bitwise bitcoin futures ETF withdrawal on Twitter.

  • He cited costs and comparatively poorer investment returns for long-term investments as reasons for the decision.

  • The SEC has been more open to approving futures-based bitcoin ETFs, as recent statements and decisions have indicated.

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Bitwise has withdrawn its application for a bitcoin futures ETF, according to CIO Matt Hougan. Instead, it will focus on launching its spot ETF, which it feels is better suited for long-term investors.

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Bitwise has withdrawn its bitcoin futures ETF application, according to Bitwise CIO Matt Hougan, who made the announcement on Twitter. The spot filing remains in play, however, and competes with several other applications for the United States Securities and Exchange Commission’s (SEC) attention.

Hougan offered an explanation for the withdrawal, which on the whole comes down to spot ETFs being better for long-term investors and the costs associated with futures ETFs. Hougan refers to contango when the futures price of an asset is higher than its spot price. He says that Bitwise’s analysis shows that contango would cost investors 5–10% every year before compounding.

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Currently, contango is over 6%, and that the benefits of a futures-based bitcoin ETF don’t make it worthwhile. The end result of all of this is “costs on top of costs, plus added complexity.”

Hougan concludes the Twitter thread by saying that Bitwise will continue towards its goal of a spot bitcoin ETF. Bitwise even released a report over 100 pages long detailing while spot bitcoin ETFs were better than futures-based bitcoin ETFs.

SEC more open to futures-based bitcoin ETFs

The SEC has signaled its willingness to allow futures-based bitcoin ETFs, and SEC Chair Gary Gensler has made comments relating to the same. Investor protection remains a priority for the SEC, but Gensler sees established investment pacts and federal securities laws providing adequate protection for these investment vehicles. The number of ETF applications has been steadily rolling in over the past 12 months, with more approvals on the horizon.

The past six months have been particularly fruitful. The ProShares bitcoin futures ETF has performed very well, which, in October 2021, already neared its limit on futures contracts. VanEck has also received approval for its much talked about bitcoin futures ETF.

The U.S. can expect to see more approvals of ETFs in the months to come. When a spot ETF will be approved, however, remains to be seen.

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Rahul's cryptocurrency journey first began in 2014. With a postgraduate degree in finance, he was among the few that first recognized the sheer untapped potential of decentralized technologies. Since then, he has guided a number of startups to navigate the complex digital marketing and media outreach landscapes. His work has even influenced distinguished cryptocurrency exchanges and DeFi platforms worth millions of dollars.

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