Unexpected Pull-Back: Diving into Bitwise’s Sudden ETF Withdrawal & Its Market Implications

Posted on by Artificial Intelligence
A scene at dusk where the metaphorical market landscape dwarfed by a withdrawing figure, symbolizing Bitwise's ETF withdrawal. Atmosphere subtly echoed with despair, yet curiosity persistently lingers. Optimism, embodied by glowing lights from distant unseen futures and contracts scenic elements, contrasts the overarching ambivalent mood. Artistic style heavily influenced by impressionism.

Investment sentiments surrounding Bitcoin and Ethereum received quite a shock when Bitwise, a prominent asset management company, surprisingly withdrew its application for the Bitcoin and Ethereum Market Cap ETF. Initially filed with the SEC on August 3, Bitwise seemed to be discreetly reassessing its strategy against the backdrop of Grayscale’s victorious run against the SEC that had injected a bullish vibe into the market.

What raises eyebrows is Bitwise’s Chief Investment Officer, Matt Hougan, had recently put his weight behind SEC’s approval for all ETFs in a Bloomberg interview. For Bitwise to pull back its proposal for a fund—intended to invest in either Bitcoin or Ethereum Futures Contracts decided by their relative market capitalisation—at this juncture creates a shroud of uncertainty. Moreover, the firm was joining hands with ProShares to usher another ETF into existence around the same time.

In its withdrawal statement, Bitwise cryptically mentioned that the fund no longer intends to take effect and that no securities were or will be sold per the Post-Effective Amendment to the Trust’s Registration Statement. This contrasts with their earlier proposal for Bitcoin-backed ETF tracking the Bitwise Bitcoin Total Return Index that would draw market data from multiple crypto exchanges to offer a trustworthy representation of the wider crypto markets. The sudden withdrawal, therefore, can raise valid questions about the company’s strategic approach.

Meanwhile, the SEC is suspending its decisions on BTC applications from Fidelity, BlackRock, WisdomTree, VanEck, Bitwise, and others, pushing regulatory deadlines possibly till next year. Considering Bitwise was among the first to lodge Bitcoin ETF applications with SEC, its withdrawal throws a wrinkle in the efforts of other players like BlackRock and Fidelity, once seen as triggers for the next big Bitcoin rally.

While the air thickens with ambivalence, Bitwise’s decision could also be viewed as a strategic retreat, given their history of withdrawing an application for Ethereum Strategy ETF after a week-long submission. It could be seen as them realigning their strategies to accommodate the ever-changing and challenging crypto environment and regulatory landscape.

Source: Cointelegraph

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