11 Nov 2021 · 1 min read

This Is Why Bitwise Withdrew BTC Futures ETF

Source: AdobeStock/24K-Production

The crypto index fund provider Bitwise Asset Management says it has withdrawn its application for a bitcoin (BTC) futures-backed exchange-traded fund (ETF) in the US, and will instead focus its efforts on getting a spot-based ETF across the finish line.

According to Bitwise’s chief investment officer Matt Hougan, the firm’s proposal for a futures-based ETF was withdrawn because of “added complexity” and higher than expected costs associated with such an ETF.

In a Twitter thread on Wednesday, Hougan went into detail on the firm’s decision. He explained that they initially thought the benefits of a futures ETF in terms of convenience and accessibility would outweigh the costs of contango, referring to the phenomenon that longer-dated futures contracts typically trade at a higher price than spot.

In addition, Hougan said they initially believed it would be possible to also hold bitcoin exchange-traded products (ETPs) listed in Canada in addition to bitcoin futures contracts as part of the ETF, which would have lowered the overall costs of managing the fund.

“Unfortunately, that’s not permitted [at the moment],” Hougan said.

As a result, the firm concluded that long-term bitcoin investors “would be better served by spot exposure,” which Hougan noted is already readily available.

Moreover, the chief investment officer reiterated that Bitwise has already filed for a spot-based bitcoin ETF with the US Securities and Exchange Commission (SEC).

According to the Bitwise executive, the company now believes that it will be possible to get a spot ETF approved, given the analysis the firm has done that concluded that the regulated market that is the Chicago Mercantile Exchange (CME) “is now the leading source of price discovery in the bitcoin market.”

“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,” Hougan concluded by saying.

Learn more:
- Here's What You Need to Know About the Bitcoin Futures ETF
- First Bitcoin ETF Moves to November Contracts as Competition Heats Up

- MicroStrategy's and Grayscale Bitcoin Trust's Shares Now Compete with ETFs
- Australian Crypto-Focused ETF Hits Record, Spot-Based BTC, ETH ETFs Expected