Tuesday, November 30, 2021

Bitwise withdraws its application for a bitcoin futures ETF.

The Takeaway:

Bitwise has withdrawn its application for a bitcoin futures ETF, according to CIO Matt Hougan.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

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Cryptocurrency firm Bitwise has withdrawn its bitcoin futures ETF application, according to Bitwise CIO Matt Hougan, who announced on Twitter. However, the spot filing remains in play and competes with several other applications for the United States Securities and Exchange Commission’s (SEC) attention. Hougan explained the withdrawal, which on the whole comes down to spot ETFs being better for long-term investors and the costs associated with futures ETFs. 

 

“Bitwise will continue towards its goal of a spot bitcoin ETF.”

Hougan referred to the 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. 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.

 

SEC willing is to allow 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. Earlier, 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.

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Disclaimer: The article reflects the opinions of the author and is not representative of Chaintimes’ views.
The article does not offer any investment advice. User discretion is advised when investing in or trading with cryptocurrency. Extensive and diligent research should be carried out by the reader before making a decision.

Jai Pratap
Jai Pratap
A Mass Media Graduate who loves to write. Jai is also a sports enthusiast and a big movie buff. He loves to learn new things.

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