Bitwise Liquidates Six Option-Income ETFs — What Investors Should Know

Bitwise has pulled the plug on six of its option-income ETFs. Trading for those funds ended on July 31, and anyone still holding shares on Aug. 3 will see their shares automatically converted to cash rather than sold on an exchange. The fund board approved the closures at the end of June, and the final net asset value (NAV) calculation is scheduled for Aug. 7 with cash expected to hit broker accounts around Aug. 10.

The short version: which funds and why this matters

The six funds being shut down carried the tickers ICOI, IMRA, IMST, IGME, ICRC, and IETH. Each used an option-income approach linked to underlying names such as Coinbase, Marathon Digital, GameStop, Circle, and Ethereum (one fund was labeled “Strategy”). The decision means the funds stopped accepting creation and redemption orders after the July 31 close, and holders didn’t get to pick an execution price once trading ceased — they’ll simply receive cash based on the final NAV.

Shareholders should expect to recognize a capital gain or loss on redemption. The issuer also indicated it may issue one or more distributions before or with the redemption — those distributions can affect the NAV and the eventual cash returned.

What the payouts and numbers actually looked like

These ETFs made noisy headlines because of mouthwatering distribution rates paired with strange official yield metrics. In late April, Bitwise published annualized distribution rates that ranged roughly from about 11% to 26%, depending on the fund — but the 30-day SEC yield for every fund showed up as 0% at that time. That’s because the two metrics measure very different things: the annualized distribution rate is based on the latest monthly payout annualized against recent NAV (and is not a total-return figure), while the 30-day SEC yield reflects actual dividends and interest after expenses over a standardized lookback period.

Bitwise also labeled much of those payouts as return of capital (ROC) in its estimates. In April, most of the funds were estimated to have distributions that were 100% ROC (one fund was estimated at 0%), then the tax-characterization mix shifted in May, and by late June the company’s estimate for the distributions again put all six at 100% ROC with SEC yields still at 0%. These were company estimates, not final tax determinations, and the classifications can change when taxes are finalized.

Just before liquidation the combined assets under management across the six funds were roughly $23 million. NAVs shown before closing varied — one fund had an NAV near $7.22 while another was around $22.82 — and lifetime NAV returns since inception were deeply negative in many cases, ranging from roughly a low-double-digit loss on one fund to losses exceeding 60% on another depending on the snapshot date.

Bottom line: if you owned any of these tickers and still hold them after trading stopped, expect a cash redemption based on the final NAV calculation scheduled for Aug. 7, with funds expected to land in brokerage accounts about a few days later. The exact amount you get will depend on that final NAV and any distributions the funds make before redemption.