Hashdex, a cryptocurrency asset management firm, has announced plans to close its DEFI ETF, which holds $14.7 million in assets, marking what could be the first liquidation of a U.S. spot bitcoin exchange-traded fund (ETF).
Comparison of Assets Under Management
In contrast, BlackRock’s IBIT leads the market significantly with $47.08 billion in assets. WisdomTree’s BTCW, the second smallest ETF, has $142.4 million.
The closure of Hashdex’s DEFI is set for August 17, after which the fund will liquidate its bitcoin holdings and distribute the proceeds to its investors. This move follows a trend of dwindling inflows into the ETF market, as investor interest has shifted towards higher returns from AI-related investments. Data from SoSoValue indicates that all U.S. bitcoin ETFs have experienced net outflows for the past three months.
According to K33 Research’s Vetle Lunde, "Much of the market views the opportunity cost of holding BTC as too high while anything AI-related soars," highlighting the shift in investor focus.
While BlackRock’s iShares Future AI & Tech ETF has seen a 39% increase in assets to $3.6 billion, the crypto market has declined approximately 36%, as reported by the CoinDesk 20 Index.
The Hashdex DEFI ETF has recorded the lowest cumulative inflows among U.S. spot bitcoin ETFs. The fund’s inability to gain traction stands in stark contrast to the overall growth of the U.S. spot bitcoin ETF market, which currently has $77.6 billion in assets and has drawn in $51.5 billion in total inflows since inception.
Hashdex entered the spot bitcoin market later than its competitors, launching DEFI as a futures ETF in September 2022 and converting it to a spot product in March 2024, almost three months after BlackRock’s IBIT debuted. The fund’s expense ratio of 0.25% was equivalent to those of larger competitors like BlackRock and Fidelity, offering no financial incentive to investors opting for the less liquid option.
While spot crypto ETF closures have occurred internationally, such as Cosmos Asset Management’s withdrawal from the Australian market in late 2022, Hashdex's decision does not signal an end to spot bitcoin ETFs in the U.S. The majority of inflows have been directed to BlackRock’s IBIT, which has received $60.5 billion, while Fidelity’s FBTC has attracted about $9.95 billion.
Despite the closure of DEFI, Hashdex remains active in the U.S. crypto ETF market, managing over $200 million across other products, including the diversified Hashdex Nasdaq Crypto Index US ETF (NCIQ). CoinDesk has reached out to Hashdex for further comments.