Bitcoin ETF application is coming again? After repeated failures, it will continue to fail

On June 17, the U.S. Securities and Exchange Commission (SEC) released a document showing that asset management company WisdomTree Trust applied to launch an exchange-traded fund (ETF) that aims to provide broad market exposure to four commodity sectors: energy, agriculture, industrial metals, and precious metals, mainly through investments in futures contracts. It is reported that 5% of net assets will be invested in CME Bitcoin futures contracts.
ETFs have not appeared in various news reports on cryptocurrencies for a long time, and this time WisdomTree's application has not attracted much attention from the market. Cryptocurrency supporters have long believed that Bitcoin ETFs will bring a huge boost to the development of this emerging industry. However, the repeated failures of various ETF applications have really discouraged the market.
According to Bloomberg, Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research, said:
“The SEC has directly highlighted numerous concerns about Bitcoin ETFs and is unlikely to approve an ETF that explicitly tracks Bitcoin.”
In February this year, the SEC rejected Wilshire Phoenix's application to launch a Bitcoin ETF on NYSE Arca. The proposal hopes to use a mix of Bitcoin and short-term Treasury bonds to mitigate the volatility of cryptocurrencies. However, the SEC believes that Wilshire has not yet proved that the Bitcoin market is resistant enough to market manipulation. The issue of market manipulation has also become a major obstacle to all Bitcoin ETF proposals.
In recent years, the Bitcoin market has gradually become a "futures market" where stocks compete with each other. Various malicious sharp rises and falls have made many traders feel that the "bankers" are acting recklessly. Perhaps the market manipulation problem has not improved, but has continued to worsen, which makes the approval of the ETF even more slim.
The ETF WisdomTree Trust has filed for is called the WisdomTree Enhanced Commodity Strategy Fund and the filing says it will provide broad exposure to four commodity sectors through futures contracts: energy, agriculture, industrial metals and precious metals.
Another potential problem with WisdomTree’s proposal is its use of futures, a practice that has come under increasing scrutiny after oil futures contracts fell into negative territory in April, destabilizing the United States Oil Fund.
In addition, it is worth noting that the fund intends to invest 5% of its net assets in CME Bitcoin futures contracts. CME Bitcoin futures contracts are cash-settled contracts, so investors will not invest directly in Bitcoin. Steven Dunn, head of ETFs at Aberdeen Standard Investments, said:
“My experience tells me that in a world where we have physical products versus futures products, most investors want and expect the spot price, they want to get the physical product. I always have some concerns, do investors really understand what they are buying?”