Asset Management Firm Bitwise Withdraws BTC and ETH ETF Application

Grayscale, the biggest Bitcoin Trust in the world, recorded a historic victory in its battle against SEC. The firm had launched a lawsuit against the federal agency to appeal against the delay in Bitcoin spot ETF adoption. However, crypto index fund management firm Bitwise has taken a new approach on the matter.

Bitwise has sent surprising waves across the crypto market by retracting its Bitcoin and Ethereum ETF application. The applications in question were market cap weight strategy exchange-traded fund. These applications were filed with SEC on 23rd August.

The decision has been regarded as an unexpected development among crypto investors and analysts. The main objective of the ETF application was to enable investors to gain capital appreciation.

However, the application issuers have argued that the results of this type of funds were not warranted. CIO Matt Hogan has argued in support of the Bitcoin ETFs listed at SEC during a recent interview with Bloomberg.

It is worth noting that market cap weighted ETFs allocate weight in an underlying asset in proportion to its market cap. The ETFs were set to take up positions in either Bitcoin or ETH futures contracts.

Bitwise is Working with ProShares to Launch New ETFs

Bitwise also worked with ProShares to issue new ETFs at the same time. Bitwise management has maintained that it does not intend to continue the fund. The firm has also declared that no securities are sold or would be sold in regards to the amendments added in the registration statement. SEC has extended the time for approving Bitcoin spot ETF applications.

The biggest applicants for spot ETF include noteworthy firms such as Valkyrie, BlackRock, WisdomTree, Invesco Galaxy, VanEck, and Fidelity.

SEC has published a new filing citing the adjunction of the spot ETF applications on 31st August, 2023 for named financial enterprises. On this account, the agency has mid-October to issue a final decision. However, the regulator may also undertake 3rd delay in the deadline that grants it time till January to publicize its final decision.

Bitwise is one of the first firms that applied for a Bitcoin ETF spot ETF. The firm first filed for the ETF in 2019 for an ETP backed by Bitwise Bitcoin Total Return Index. This index assigned Bitcoin value on account of price changes at various exchanges.

Investors can add cryptocurrencies in their portfolio as a way to diversify their portfolio. There are some instances where virtual asset market is impacted by the changes taking place in the stock market. The presence of institutional investors in crypto projects can lead to changes in price movements in a positive or negative manner.

Another important factor on virtual currencies is market sentiment. Investors can measure the reflection on crypto using indicators such as fear and greed index. A positive development in the stock market may also lead to the positive development in the crypto markets.

 There are some other contributing factors such as Macroeconomic metrics such as inflation, interest rates that can change the dynamics for virtual currencies. On the other hand, there are also some factors that lessen the impact of stock exchanges on the blockchain ecosystem. When trading volume for altcoins increases it dilutes institutional influence.

At the same time, regulatory clarity increases legislative standing for virtual currencies. Meanwhile, the crypto space also depends on technical innovation that introduces new utilities and makes the blockchain protocols more efficient.