The launch of the very first Bitcoin ETFs in the US was marked by widespread excitement and record-breaking numbers. This was also followed by a number of asset management firms flocking to the SEC with their own applications for a Bitcoin Futures-backed ETF, with varying degrees of creativity.
However, what most enthusiasts have really been waiting for all along is a spot-based Bitcoin ETF that tracks the cryptocurrency’s price in real-time.
In solidarity with this request, Bitwise Asset Management has withdrawn its application for a Bitcoin (BTC) futures-based exchange-traded fund (ETF), while remaining bullish on the need for a spot Bitcoin ETF, according to a Twitter announcement by Bitwise CIO Matt Hougan.
While noting that the firm’s commitment towards launching an ETF product that directly tracks BTC prices remain firm, Hougan said,
“Ultimately, what many investors want is a spot Bitcoin ETF. We think that’s possible. 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.”
In the Twitter thread, Hougan highlighted the long road that led to the approval of the first BTC ETF last month, which had initially been proposed in 2013 by the Winklevoss twins. Even as the ETF was a “big step,” Hougan’s firm ultimately supports the launch of a spot ETF for various reasons according to him.
He cited Bitwise analysis to show that a Bitcoin Contango, where the futures price is higher than the spot price, could “cost investors 5-10% per year, before compounding.” He further added,
“In addition, bitcoin futures ETFs have already soaked up all available capacity at futures commission merchants. This will ease over time, but for now, it’s added yet another expense. The result? Costs on top of costs, plus added complexity.”
Nevertheless, the exec noted that none of this means that futures-based ETFs are bad, and praised the ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF for being “thoughtful”. Although, he added that,
“But we believe most long-term investors would be better served by spot exposure, and today, there are many options for getting spot-based exposure — including other Bitwise funds.”
The electronic securities exchange NYSE Arca had filed for the Bitwise Bitcoin ETF based on October 14, which would track “actual” BTC prices as opposed to those on the Futures market.