Hashdex plans to close its DEFI ETF, marking a potential first for U.S. spot bitcoin ETFs, amidst declining market interest.
Hashdex, a cryptocurrency asset management company, is set to close its DEFI ETF, which currently manages $14.7 million in assets. This will mark a significant event as it potentially becomes the first liquidation of a U.S. spot bitcoin exchange-traded fund.
Market Context and Comparisons
In stark contrast, BlackRock’s IBIT dominates the market with $47.08 billion in assets, while WisdomTree’s BTCW is significantly smaller at $142.4 million.
The closure of Hashdex’s DEFI ETF will take place on August 17, leading to the liquidation of its bitcoin holdings and the distribution of funds to investors. This decision is part of a broader trend reflecting declining investor interest in ETFs, as many have shifted their focus to AI-related investments. Recent data indicates that U.S. bitcoin ETFs have seen net outflows for the last three months, highlighting a change in investor priorities.
Vetle Lunde of K33 Research noted, "The opportunity cost of holding BTC is perceived as too high compared to the soaring AI sector," emphasizing this shift in market dynamics.
As the crypto market has dipped approximately 36%, BlackRock’s iShares Future AI & Tech ETF has flourished, recording a 39% increase in assets to $3.6 billion.
Hashdex’s DEFI ETF recorded the lowest cumulative inflows of any U.S. spot bitcoin ETF, a disappointing outcome compared to the market's overall growth, which boasts $77.6 billion in assets and $51.5 billion in inflows since inception.
Having launched DEFI as a futures ETF in September 2022 and converting it to a spot product in March 2024—after BlackRock’s IBIT—Hashdex's entry came later than many competitors. With an expense ratio of 0.25%, it offered no compelling financial advantages over more liquid options from larger players like BlackRock and Fidelity.
While Hashdex's decision to close its DEFI ETF reflects struggles within the sector, it does not imply the end of U.S. spot bitcoin ETFs. Significant inflows continue to favor BlackRock’s IBIT, which has received $60.5 billion, and Fidelity’s FBTC, which has garnered approximately $9.95 billion.
Despite this setback, Hashdex continues to manage over $200 million in other products within the U.S. crypto ETF market, including the popular Hashdex Nasdaq Crypto Index US ETF (NCIQ). Further comments from Hashdex are pending.
