Bitwise will close the Dogecoin ETF in 10 months

Bitwise announced the liquidation of its Dogecoin ETF, which is expected to close trading on October 14.

Bitwise has decided to liquidate its Dogecoin ETF (symbol: BWOW). About 10 months after the fund went public on NYSE Arca, October 14 is expected to become its last trading day.

According to Bitwise's filing with the U.S. Securities and Exchange Commission (SEC) on September 10, trading in BWOW will cease before the market opens on October 15. Investors can sell their positions before the close of the previous trading day. The asset manager said it chose to close the fund in order to "optimize its product range to meet changing investor needs." Bitwise did not list trading volume, asset management size or fund fees as reasons for the closure.

Liquidation process and shareholders 'equity

The creation of new shares of BWOW will cease before the opening of NYSE Arca on October 15. Once secondary market transactions are completed, remaining shareholders do not need to submit redemption applications. Bitwise plans to calculate the fund's net asset value (NAV) on October 21 and distribute the corresponding cash to shareholders on October 22. The SEC filing states that the fund's positions should be fully liquidated on or shortly after October 22. During the liquidation period, BWOW will no longer manage its portfolio in accordance with its established investment goals, as the Dogecoin position will be sold.

Cash distributions will be automatically transferred to shareholders 'brokerage accounts. Bitwise warned that these payments could create taxable events and that each investor's tax liability depends on factors such as purchase price, holding period and account type.

Market Performance and Capital Flows

data showed that BWOW's trading volume was close to US$3 million in its first week, but daily activity failed to return to its original level in the following months. According to data released by SoValue, the net inflow of all U.S. Dogecoin exchange-traded products (ETP) in August was approximately US$318,000. Although this monthly result reversed the slight outflows reported in July, it was still small compared to capital flows through mature products such as Bitcoin and Ethereum.

The total trading volume of the Dogecoin fund since its launch is approximately US$300 million. In comparison, similar products related to Hyperliquid-recorded $2.1 billion in transaction volume, while Zcash and Chainlink funds generated approximately $1.5 billion and $680 million in transaction volume, respectively. It should be noted that these data cover trading activity, not net investor deposits or assets held. Trading volume measures the value of shares exchanged during the period, while net flow measures the inflow of funds after deducting redemptions.

Risk factors and market environment

BWOW is a non-decentralized product that holds only one crypto asset. Its prospectus warned that a decline in the market value of Dogecoin could have a more drastic impact on the fund than a diversified portfolio. Bitwise describes DOGE as a "memecoin" with no clear utility goal. The company's risk disclosure noted that speculators make up the majority of its users and warned that Dogecoin's unlimited issuance model could have a negative impact on its long-term price.

Liquidity was identified as another major risk. Weak trading conditions may make it difficult for investors to sell fund shares at ideal prices and may increase the gap between stock price and net asset value. Other risks listed include custody, theft, blockchain failures and regulatory changes. Bitwise said some technical or legal risks may not be obvious until blockchain systems are used more widely.

As of September 11, DOGE prices were trading around US$0.084 after losing approximately 2.6%. Although price fluctuations occurred after Bitwise announced liquidation, available market data did not establish that fund closures were the cause of the decline.

Bitwise's Other Crypto Investment Products

Closing BWOW does not mean that Bitwise has withdrawn from the crypto exchange-traded product space. The company reports that it has approximately $9 billion in client assets across more than 70 products, including ETFs, private equity funds, separately managed accounts, hedge fund strategies and pledged products. Its product line includes products linked to Bitcoin, Ethereum, Solana, XRP, Chainlink, Avalanche and Hyperliquid.

Bitwise serves more than 5,500 private wealth teams, registered investment advisers, family offices and institutional investors. The Dogecoin ETF charged a 0.34% management fee at launch. Bitwise initially waived the fee for a limited period of time. See the fund release materials for specific conditions. Investors who sell BWOW before October 14 will receive the market price at the time of order execution. Any investor holding shares until liquidation will receive cash based on the net asset value on October 21, which may differ from previous BWOW trading prices. Bitwise's SEC filing states that the final distribution constitutes a taxable event for shareholders holding funds in taxable accounts and recommends that investors consult tax advisers on their personal circumstances.