TL;DR
- Hashdex will close and liquidate its DEFI bitcoin spot ETF on August 17, in what would be the first closure of a fund of this type in the U.S.
- The fund managed just $14.7 million in net assets, compared to BlackRock’s IBIT, the market leader, with $47.08 billion.
- Flows into bitcoin spot ETFs have been in negative territory for three consecutive months, pressured by the superior performance of AI investments.
Hashdexannounced the closure and liquidation of its DEFI bitcoin spot ETF, in what would be the first case of a fund of this type to be liquidated in the United States.
The crypto asset manager cited a comprehensive evaluation of the fund that included assets under management volume, liquidity, operating costs, investor interest, and the product’s positioning within its product lineup.
Hashdex Versus the Market: An Unbridgeable Gap
August 17 will be the last trading day for the DEFI fund. From that date, it will begin to sell its bitcoin holdings and distribute the funds in cash to its shareholders, according to a filing submitted to the U.S. Securities and Exchange Commission (SEC). The difference with the broader market is staggering: U.S. bitcoin spot ETFs have accumulated $77.6 billion in net assets and have received $51.5 billion in net flows since their launch.
The Hashdex fund was the smallest of all bitcoin spot products available in the U.S., with just $14.7 million in net assets. The second smallest, WisdomTree‘s BTCW, manages $142.4 million.
Hashdex’s market position was further constrained by its late entry: although DEFI operated as a bitcoin futures ETF since September 2022, it did not convert into a spot product until late March 2024, nearly three months after the launch of BlackRock’s IBIT. Its expense ratio of 0.25% matched that of BlackRock and Fidelity, offering no discount whatsoever to compensate for the fund’s lower liquidity.
AI Puts Pressure on the Crypto Industry
The macroeconomic context also worked against Hashdex. Flows into bitcoin spot ETFs have accumulated three consecutive months of net outflows, according to data from SoSoValue. Vetle Lunde, head of research at K33 Research, explained in a June report that “much of the market considers the opportunity cost of holding BTC to be too high while everything related to artificial intelligence is surging.”
BlackRock‘s iShares Future AI & Tech ETF accumulated a gain of 39% through July and manages $3.6 billion in assets; during that same period, the crypto market fell approximately 36% according to the CoinDesk 20 Index.
The closure of the DEFI fund does not imply Hashdex’s withdrawal from the ETF market in the U.S. The company maintains more than $200 million under management across other products available in the country.