MW VanEck to liquidate its bitcoin futures ETF after launching spot fund
By Tomi Kilgore and Frances Yue
The firm's Bitcoin Strategy ETF, which has underperformed bitcoin futures in recent months, will be delisted after the Jan. 30 close
VanEck said Wednesday that it will liquidate its bitcoin futures exchange-traded fund at the end of this month, as the firm expects investor appetite to shift to newly approved funds investing directly in the cryptocurrency.
The ETF sponsor said shareholders may sell their shares in the VanEck Bitcoin Strategy ETF XBTF until the market closes on Jan. 30. After the close, the ETF will be delisted.
VanEck made the move after it launched a spot bitcoin ETF HODL last week, along with several other asset managers, after the Securities and Exchange Commission greenlighted spot bitcoin funds for the first time ever on Jan. 10.
"We believe investor appetite would switch from products offering bitcoin-futures exposure to direct bitcoin exposure," Kyle DaCruz, director of digital assets product at VanEck, wrote in emailed comments to MarketWatch.
"Spot products should more closely track the price of bitcoin, as they don't incur the costs associated with rolling futures contracts," he said.
The SEC first approved a bitcoin futures ETF in late 2021, and for years rejected all applications for ETFs that invest directly in bitcoin. The agency had argued that bitcoin spot markets could not be sufficiently surveilled to prevent fraud and manipulation, while bitcoin futures markets were overseen by registered futures exchanges with sophisticated surveillance capabilities.
The situation started to change last August, when a federal judge ruled that the SEC's reasons for denying an application by Grayscale Investments to list a spot bitcoin ETF were "arbitrary and capricious" and in violation of federal administrative law.
Those who choose not to sell shares of XBTF before it is delisted will receive a distribution of cash on the liquidation date, which is expected to take place on or about Feb. 6.
The ETF fell 0.5% in morning trading, putting it on track for its lowest close of 2024, while bitcoin futures dropped 2%, according to Dow Jones Market Data.
XBTF, which started trading on Nov. 16, 2021, invests in front-month bitcoin futures (BTC.1), but doesn't directly invest in bitcoin (BTCUSD) or other cryptocurrencies.
The fund's total net assets were $54.4 million as of Dec. 31, and the average daily trading volume over the past 30 days was about 37,000 shares, according to FactSet.
XBTF has rallied 40.5% over the past three months, while bitcoin futures have climbed 50.1% and the S&P 500 index SPX has gained 8.1% in that time.
-Tomi Kilgore -Frances Yue
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 17, 2024 14:31 ET (19:31 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments