The first-ever liquidation of a US Bitcoin spot ETF has been confirmed, with cryptocurrency asset manager Hashdex announcing the closure of its $14.7 million Bitcoin spot ETF product. This marks the first such case in the American market.
While Bitcoin futures ETFs, such as VanEck's XBTF (XBTF.US) in 2024, have been shut down before, no US fund directly holding Bitcoin had ever been liquidated. Hashdex cited a comprehensive assessment of the fund's assets under management, liquidity, operating costs, investor interest, and the product's position within the company's broader lineup as the reasons for the decision.
Investors are increasingly shifting capital toward higher-yielding AI-related investment products, causing inflows into these ETFs—first approved in January 2024—to dwindle. This macro-level capital migration trend is the underlying cause of the situation, with net outflows from these funds remaining positive over the past three months.
K33 Research's head, Vetle Lunde, wrote in a June report that the opportunity cost of holding Bitcoin is considered too high amid rising AI asset prices. This shift in capital preference is evident in the data: the CoinDesk 20 (CD20) index shows BlackRock's (BLK.US) iShares Future AI & Tech ETF (ARTY.US) gained 39% through July, with assets under management of $3.6 billion, while the broader crypto market declined by roughly 36% over the same period.
Woofun AI data reveals that among all US Bitcoin spot ETFs, Hashdex's Bitcoin ETF (DEFI (DEFI.US)) has the smallest net asset size and the lowest cumulative net inflow. The second smallest, WisdomTree's (WT.US) BTCW (BTCW.US), holds $142.4 million in net assets, while market leader BlackRock's (BLK.US) IBIT (IBIT.US) boasts $47.08 billion. This micro-level competitive disadvantage further accelerated DEFI's (DEFI.US) exit.
According to a filing with the US Securities and Exchange Commission, DEFI's (DEFI.US) last trading day is August 17, after which the company will begin selling its remaining Bitcoin and distribute the cash proceeds to shareholders. The fund's failure to gain momentum contrasts sharply with the overall growth of the US Bitcoin spot ETF market, which has reached $77.6 billion in net assets with cumulative net inflows of $51.5 billion since inception.
Hashdex entered the Bitcoin spot market later than competitors. While it launched DEFI (DEFI.US) as a Bitcoin futures ETF in September 2022, it only converted it to a spot product at the end of March 2024, nearly three months after IBIT's (IBIT.US) launch. The product's fee was 0.25%, matching fees charged by BlackRock (BLK.US) and Fidelity, offering no cost advantage for investors choosing this smaller, less liquid product.
Outside the US, spot cryptocurrency ETFs have been shut down before. In November 2022, Cosmos Asset Management closed its Bitcoin and Ethereum ETFs listed in Australia just six months after launch, as the two funds held only about A$1.1 million (approximately $710,000) in total assets.
Hashdex's move could signal the beginning of the end for Bitcoin spot ETFs. Currently, $60.5 billion of all inflows have gone to IBIT (IBIT.US), while approximately $9.95 billion has flowed into Fidelity's FBTC (FBTC.US). Grayscale's GBTC (GBTC.US), which converted from a trust structure to a Bitcoin spot ETF, has seen $27.47 billion in capital outflows.
Hashdex is not exiting the US crypto ETF market entirely. The company still manages over $200 million in assets through other products still issued in the US, including the diversified Hashdex Nasdaq Crypto Index US ETF (NCIQ (NCIQ.US)). Media has contacted Hashdex for comment.
Comments