Bitwise Files S-1 for DOGE ETF as Bitcoin, Ethereum Funds See Massive Outflows

By Aaron Feuerstein January 29, 2025 In Bitcoin, Bitwise, Dogecoin, ETF, Ethereum
Isometric concept of Bitcoin ETF, exchange traded fund and cryptocurrency.
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  • Tuttle Capital Management withdrew its filing for 10 leveraged crypto ETFs including controversial memecoin funds after initially proposing products for BONK, TRUMP, and MELANIA tokens.
  • Bitwise has filed an S-1 registration for a physically-backed Dogecoin ETF under the Securities Act of 1933, marking the first true Spot Dogecoin ETF proposal.
  • Industry experts have criticised memecoin ETFs as pure speculation, with Morningstar’s Bryan Armour suggesting they belong in casinos rather than stock markets.
  • Established Bitcoin and Ethereum ETFs experienced significant outflows totalling US$600 million over two days, though US spot Bitcoin ETFs still hold 5.55% of all Bitcoin supply.

Filings for crypto exchange-traded funds (ETFs) are coming in on an almost daily basis. Earlier this week, Tuttle Capital Management announced their filing of 10 leveraged crypto ETFs, featuring some well-known coins such as Solana (SOL), XRP and Chainlink (LINK), as well as Trump’s memecoin TRUMP and the First Lady’s MELANIA.

Related: ETF Issuers Test Waters of “New” SEC with Memecoin Filings and Bitcoin In-Kind Redemptions

Interestingly though, Tuttle just issued a statement that it has withdrawn these filings. Bloomberg Senior ETF Analysts Eric Balchunas suggested in a post on X that this may be where the US Securities and Exchange Commission (SEC) “draws the line” when it comes to what’s acceptable and what not.

Bitwise’s Dogecoin S-1 Filing

And the latest filing for a Dogecoin (DOGE) ETF is particularly interesting. Bitwise has filed an S-1 for their Bitwise Dogecoin ETF, officially following the trust registration last week.

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Balchunas said that this is “the first ‘33 Act (a la $IBIT) doge filing”.

Rex has one filed under 40 Act but that isn’t the same true blue physically backed structure.

Eric Balchunas, Bloomberg

A filing under the Securities Act of 1933 suggests that the ETF is structured as a traditional securities offering, which means that it aims to hold “physical” Dogecoin directly.

Compared to this, a filing under the Investment Company Act of 1940 doesn’t have the same physically backed structure, which implies it may not directly hold Dogecoin. Instead, it might invest in derivatives or other securities linked to the performance of Dogecoin.

Memecoin ETFs Similar to Casino Type Gambling?

Morningstar executive Bryan Armour told the Financial Times that he doesn’t “understand the use case or the purpose of these ETFs, other than to gamble on whether the price is going up or down”.

The director of passive strategies research for North America said these funds are “moving away from the purpose of capital markets”.

This type of speculative instrument might make more sense in a casino than in a stock market.

Bryan Armour, Morningstar

Nate Geraci, the president of The ETF Store said that although there are many questionable ETFs already available, “memecoins would take this to an entirely new level”.

Historically, the vast majority of memecoins trends towards zero, which creates a dilemma for issuers. The optics of offering memecoin ETFs could be detrimental to a firm that wishes to be taken seriously by Wall Street.

Nate Geraci, The ETF Store

“Serious” ETFs Suffer Heavy Outflows

Meanwhile, the “proper” ETFs – the Bitcoin and Ethereum funds – have seen a combined US$600 million (AU$963.3 million) in net outflows over the past two days.

Data from Farside Investors for Tuesday isn’t fully available for all ETFs, but data for Monday shows that despite IBIT’s US$63.9 million (AU$102.5 million) net inflows, several funds experienced net outflows, bringing the total flows into negative territory.

Related: China’s Cut-Price AI Model Shocks Global Markets, Coincides With Boost to Chinese Shares

Fidelity’s FBTC and Grayscale’s GTBC suffered the most, with net outflows of US$268.6 million (AU$431.3 million) and US$108.5 million (AU$174.1 million) respectively.

Ethereum ETFs fared slightly better with only US$136.2 million (AU$218.4 million) in net outflows, with Grayscale’s ETHE seeing the largest single-day net outflows at US$84.2 million (AU$135.1 million).

All the US Spot Bitcoin ETFs combined now hold 5.55% of all BTC with 1.165 million of the coin.

Bitcoin holdings by ETF, source: Bitcoin Treasuries by BiTBO/highcarts.com

Aaron Feuerstein
Author

Aaron Feuerstein

Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.

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