Bitwise's 25% Yield ETFs Were Paying You Back Your Own Money: All Six Are Being Shut Down

Bitwise's 25% Yield ETFs Were Paying You Back Your Own Money: All Six Are Being Shut Down

The headline yield was 25%. The actual 30-day SEC yield was 0%. Bitwise is now liquidating all six of its crypto option ETFs, and the remaining investors have until August before they get automatically cashed out.

The Yield That Wasn't

Bitwise marketed a suite of options-based crypto ETFs promising eye-catching annual payouts of around 25%. The structure was built on selling options contracts against crypto positions, a strategy sometimes called a "covered call" or "buffer" approach. On paper, the distributions looked generous. In reality, the SEC's standardized yield calculation told a completely different story: 0% across the board.

That number matters. The 30-day SEC yield is the metric regulators require because it strips out return-of-capital distributions. In other words, Bitwise was handing investors back their own money and calling it income. The "yield" was never yield at all.

Why This Strategy Failed in Crypto

Options-income ETFs have worked reasonably well in equity markets, most famously with products tied to the S&P 500 or Nasdaq. The concept gets complicated fast when you apply it to assets as volatile as Bitcoin and Ethereum. When crypto surges, covered call structures cap your upside. When crypto dumps, you absorb the full downside. The options premiums collected in between need to be substantial just to break even, let alone generate real income.

In a market where Bitcoin can move 20% in a week, the math rarely works in the income-seeker's favor. The six Bitwise ETFs appear to have learned that the hard way.

What Happens to Remaining Holders

Bitwise has set an automatic cash redemption deadline in August. Investors still holding shares will be cashed out at net asset value, no action required. That sounds clean, but anyone sitting on losses from the period when these funds underperformed will simply crystallize those losses at redemption.

There is no restructuring planned. All six funds are being closed permanently.

What Crypto Holders Should Watch

This is not an isolated product failure. The broader options-income ETF category exploded in popularity during 2023 and 2024, and several crypto-specific variants are still trading across multiple issuers. If you are holding any ETF marketed around high distribution yields tied to crypto options, pull up the 30-day SEC yield immediately. If that number is dramatically lower than the advertised distribution rate, you are likely receiving return-of-capital, not investment income.

The Bitwise closure is a warning shot for the entire category. Expect increased regulatory scrutiny of how these products market their yields, and watch for further liquidations from competing issuers running similar structures.

Real yield in crypto is hard to find. Products promising otherwise deserve a very close second look before you buy.