Perpetual Futures and ETF Closures: Kalshi's Stock Bridge and Bitwise's Exit

Kalshi and Bitwise are two companies that illustrate the convergence of traditional equities, prediction markets, and cryptocurrency derivatives in the US financial market. Kalshi plans to seek regulatory approval for perpetual futures tied to individual stocks and exchange-traded funds, which would be a major bridge between crypto-native trading culture and Wall Street.

The proposed products could include companies like Tesla, Apple, and Nvidia, with approximately 60 contracts under consideration. Perpetual futures are important because they do not have conventional expiration dates, allowing traders to maintain positions continuously while using leverage. However, this raises questions around leverage, market manipulation, insider trading, and investor protection.

Kalshi is regulated by the Commodity Futures Trading Commission as a designated contract market, but stock-linked perpetual products create questions that touch both derivatives and securities regulation. Kalshi has indicated that it wants the products regulated under an appropriate framework involving US regulators.

Meanwhile, Bitwise is closing its Dogecoin exchange-traded fund (ETF) less than a year after launch, citing weak investor demand. The fund reportedly struggled to attract sustained interest, with assets falling below $1 million by September. This demonstrates that regulatory approval alone does not guarantee a viable ETF market.

The two stories present a striking lesson: investors want more sophisticated and continuous exposure to traditional assets, but products must also achieve sufficient liquidity, scale, and relevance. The convergence of prediction markets, cryptocurrency derivatives, and traditional equities is driving innovation in the financial system, but capital remains selective.