Key Takeaways

• Bitwise withdrew its request for ETF.
• It claims that there is no guarantee of meeting investment goals.
• SEC’s prolonged evaluation of Bitcoin ETF listing angered the community.
• It had a negative impact on BTC price, but many supporters think ETFs are not necessary for its growth.

Bitwise surprisingly decided to withdraw  its application  for a Bitcoin and Ether Market Cap Weight Strategy ETF. This action has generated controversy in the investment world as it was first submitted to the United States Securities and Exchange Commission (SEC) on August 3.

Withdrawal Sparks Questions Amid Grayscale’s SEC Victory

Despite an uptick in market mood following Grayscale’s SEC triumph, Bitwise appears to be readjusting its strategy. The withdrawal of its ETF surprised many people. The decision was emphasized in an official document : “The fund seeks to assist capital growth for its investors. However, there is no assurance that this investment aim will be realized.

This is, however, not the first time Bitwise has decided to revoke. In order to concentrate more on the spot ETF, Bitwise previously withdrew its application  for a Bitcoin Futures ETF in November 2021. There isn’t much justification, though, for its most recent withdrawal from the “Bitwise Bitcoin and Ether Market Cap Weight Strategy ETF.”

Bitwise’s CIO, Matt Hougan, recently voiced his support for the SEC’s approval of all ETFs. The ETF was designed to channel investments into Bitcoin or Ether futures contracts based on their market capitalization, alongside a partnership with ProShares to launch a distinctive ETF.

In its statement , Bitwise made it clear:

“The Trust no longer intends to seek effectiveness of the Fund and no securities of the Fund were sold, or will be sold, pursuant to the above-mentioned Post-Effective Amendment to the Trust’s Registration Statement.”

The SEC’s decision on a number of proposed Bitcoin ETFs, including those from industry heavyweights like WisdomTree, Invesco Galaxy, and Bitwise, is still pending. A SEC document  from August 31 stated that certain Bitcoin ETF proposals would have a longer evaluation period. Mid-October is the anticipated deadline for SEC submissions. Nevertheless, these may be put off until January or perhaps the following year’s March, April, or May.

SEC’s Legacy of Bitwise

Pioneer in its field, Bitwise promptly submitted applications for its Bitcoin ETFs to the SEC. A BTC-backed ETF that mirrored the Bitwise Bitcoin Total Return Index was the goal of its early 2019 proposal . It created numbers for the index using data on Bitcoin from various exchange transactions.

This potential Bitcoin ETF was advertised as having data sources from numerous cryptocurrency exchanges. The goal was to produce a trustworthy view of the overall cryptocurrency market. In addition, they suggested using third-party custodians to store real Bitcoin.

Bitwise has had prior retractions, including one for an Ethereum Strategy ETF earlier this year, covering investments in both front- and back-time Ethereum futures. Just a week later, Bitwise decided to retract it.

This ETF withdrawal reflects shifting regulatory and Bitcoin market dynamics, leaving investors and observers anticipating the next steps in this evolving landscape.

Community Criticised the Move

Due to the SEC’s repeated delays, the community has voiced criticism and displeasure. An user of X (Twitter) stated:

Some were asking why the SEC is taking so long, calling it autistic. “It’s literally a yes or no. Quit clowning around.”

It’s a simple yes or no. Stop acting silly,” an user wrote .

Many Bitcoin supporters think the cryptocurrency has demonstrated its development potential and that it is independent from ETFs.

Bitcoin educator Kashif Raza stated:

Bitwise’s Bitcoin Spot ETF remains active despite the withdrawal of the Bitcoin and Ethereum Market Cap Strategy ETF. This keeps the crypto community intrigued, anticipating Bitwise’s future moves and potential advancements.

Investors have concerns over the disparity between Bitwise’s public statements and its actions. Given this uncertainty in the evolving world of cryptocurrency investments, predicting Bitwise’s future plans is challenging.

Although the ETF withdrawal could be seen as a setback, it might serve as an opportunity for Bitwise to reevaluate and come back stronger. The company may be proceeding cautiously in light of regulatory hurdles and uncertainties surrounding cryptocurrency-based financial products.