Crypto Quill

Global X, a provider of exchange-traded funds (ETFs), has withdrawn its application for a spot bitcoin ETF, according to a regulatory filing on Tuesday. This makes it the first company among those that applied to the U.S. Securities and Exchange Commission (SEC) for approval last year to do so.

Why Global X Pulled Out

The CBOE BZX Exchange submitted a withdrawal notice for the Global X Bitcoin Trust on Jan. 26, around two weeks after the SEC approved 11 other spot bitcoin ETFs. Securing approval for these 11 funds was tough. At first, the SEC had concerns about market manipulation, lack of surveillance-sharing agreements, and monitoring bitcoin spot markets for fraud.

After facing resistance from the SEC in its initial attempt to launch a spot bitcoin ETF in 2021, Global X faced further delays upon refiling in Aug. 2023. Global X missed the final list of potential ETFs due to documentation issues, but it’s not the only one that came up short. Pando Asset Management and 7RCC are also waiting for approval for their spot bitcoin ETFs.

Global X didn’t return Cryptonews’ request for comment by press time.

What is a Spot Bitcoin ETF and Why It Matters

A spot bitcoin ETF enables investors to track the price fluctuations of bitcoin without needing to possess the cryptocurrency, as the ETF itself holds the bitcoin. This offers a more cost-efficient and convenient option for investors who want exposure to the digital asset without dealing with the technical and security challenges of owning and storing it.

Goldman Sachs’ head of digital assets, Mathew McDermott, pointed out that investing in bitcoin through these ETFs is a more cost-efficient option compared to directly owning the crypto. He recently said Goldman has an “incredibly positive” view of the spot bitcoin ETF approvals’ market impact.

How the Market Reacted to the Spot Bitcoin ETF Launches

The authorized ETFs, including Bitwise, Grayscale, and BlackRock, saw substantial outflows since they opened for trade. These outflows, especially from GBTC, affected bitcoin’s price due to market selling pressure. Analysts noted that outflows were mainly tied to factors like forced selling related to the FTX estate and profitable investor strategies tied to GBTC’s discount in the past two years.

But Bloomberg analyst James Seyffart pointed out that the daily outflows from GBTC fell to $191.7m on Monday. These outflows have been partially balanced by investments flowing into the recently launched spot ETFs.

Seyffart also said that Global X’s withdrawal was unsurprising as “they were out of the race since at least early December but now its official.”