Bitwise Liquidates Six Option ETFs: 25% Payouts Masked Return of Capital

Woofun AI reports that Bitwise has initiated the liquidation of six crypto option-income ETFs linked to Coinbase, Marathon Digital, Strategy, GameStop, Circle, and Ethereum. This termination halts trading for these products, which had previously marketed high-yield strategies.

The final trading day occurred on Friday, July 31, after which creation and redemption orders were suspended. Consequently, shares held as of Aug. 3 are subject to automatic cash redemption at the fund's NAV rather than an exchange sale, meaning holders cannot select an execution price. Per SEC filing, shareholders generally recognize a capital gain or loss, with potential distributions occurring before or with the redemption payment.

Woofun AI data shows the final NAV is scheduled for Aug. 7, with cash expected around Aug. 10.

Financial metrics reveal that Bitwise calculates the distribution rate by annualizing the latest monthly payment and dividing it by recent NAV, explicitly stating this figure is not total return. In contrast, the 30-day SEC yield measures annualized dividends and interest after expenses, while "Return of capital" represents Bitwise's estimate of the portion reflecting an investor's original investment. Although distributions can reduce NAV and trading price, the classification is not proof that a payout was fictitious. Official fund pages dated July 26 through July 29 showed about $23.1 million of combined pre-liquidation AUM, with latest displayed NAVs ranging from $7.22 for IMST to $22.82 for IGME. Month-end figures as of June 29 put cumulative NAV returns since inception between -12.47% for IGME and -66.11% for IMST.

These figures are snapshots from different dates, leaving July 31 closing assets, liquidation values, and lifetime returns unknown. The available disclosures leave the board’s reason for closing the funds unanswered. This marks a significant contraction in the crypto option-income ETF sector.