New Era For Bitcoin & Ethereum ETFs

In a strategic move that mirrors recent actions by Valkyrie Funds, Bitwise Invest has filed an updated prospectus to transition its Bitcoin futures ETF (BITC) into the “Bitwise Bitcoin and Ethereum Equal Weight Strategy ETF”. This shift, set to take effect on October 9, 2023, is seen by many as a tactical play in the race to establish the first Ethereum Futures ETF in the US.

Bitwise Skips The Ethereum ETF Queue

James Seyffart, a Bloomberg ETF analyst, remarked on the development, stating, “Bitwise Invest just filed an updated prospectus to change BITC from a Bitcoin futures ETF to the Bitwise Bitcoin and Ether Equal Weight Strategy ETF. This is like the move that Valkyrie Funds pulled a few days ago. The effective date here would be 10/9/23.” Seyffart had previously commented on Valkyrie’s decision, labeling it a “3D chess move” if it proves successful.

The US Securities and Exchange Commission (SEC) currently has 15 Ethereum futures ETFs awaiting a decision. This includes 13 fresh applications for initial approval and two conversions, those of Bitwise and Valkyrie. Both firms appear to be attempting to bypass the traditional queue, aiming for the coveted first-mover advantage through their conversions. As the days pass, the likelihood of these ETFs receiving the green light from the SEC seems to be on an upward trajectory.

Seyffart further commented on the evolving landscape, “We’re in new territory. It’s been 13 days since Volatility Shares was first in a wave of Ethereum futures ETF filings. Back in 2021 it was just a couple days before SEC forced withdrawals and was just ~7 days in May of this year. The odds of launching increase as time goes by.”

Eric Balchunas, senior ETF analyst for Bloomberg, weighed in on the situation, observing, “Bitwise is pulling a Valkyrie who pulled an MJ (using name/strategy change to bypass the initial filing process and in this case get out earlier). Cannonball Run in effect.”

He also noted the historical context, adding, “In the past the SEC has told Ether Futures ETF filers to withdraw 5-6 days after the first filing hit. We are now on day 13 and no withdrawals. Not home free yet but a very good sign. As we predicted these will likely hit the market in mid-October.”

Currently, in the SEC’s decision-making lineup, Valkyrie leads the pack with its Bitcoin & Ether Strategy ETF (BTF), expecting a verdict by Oct. 3. Following closely is Bitwise, which has advanced to the runner-up spot with its conversion application, set for an SEC decision by October 9. Subsequently, Volatility Shares’ Ether Strategy ETF (ETHU) is in line for a decision on Oct. 11.

The rapid developments in the ETF space, particularly surrounding Ethereum, indicate a maturing market and growing institutional interest in the second-largest cryptocurrency by market cap. As the race heats up, the crypto community will be closely watching to see which firm successfully launches the first Ethereum futures ETF in the US, potentially sending a bullish signal to the spot market.

At press time, Ether (ETH) remained in its tight trading range between $1,822 and $1,882.

Featured image from iStock, chart from TradingView.com