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[DigitalToday reporter Yunseo Lee (이윤서)] Asset manager Hashdex’s <a href="https://xpertsstudio.com/institutional-bitcoin-spot-etf-holdings-rise-despite-price-drop/” title=”Institutional bitcoin spot ETF holdings rise despite price drop”>bitcoin spot exchange-traded fund (ETF) product, DEFI, has entered liquidation procedures.
On Aug. 19 (local time), blockchain media outlet CryptoSlate reported that the product completed its last trading session on NYSE Arca on Aug. 17. It also halted new trade orders the same day.
Hashdex earlier announced plans to close the fund on Aug. 3. It plans to sell the remaining bitcoin, end operations and return residual assets to existing investors through cash distributions rather than exchange sales. Investors holding DEFI after Aug. 17 can no longer use exchange liquidity and will receive cash based on net asset value (NAV) calculated during the liquidation process.
The closure differs from a broad contraction in the bitcoin spot ETF market. On the same day, net inflows across all bitcoin spot ETFs totaled $189.3 million, including $143.6 million into BlackRock’s iShares Bitcoin Trust (IBIT) alone. While market demand is being maintained, smaller products are exiting after failing to secure investors.
DEFI’s assets under management (AUM) disclosed by Hashdex as of July 30 were about $14.7 million. The company said it reviewed asset size, trading liquidity, operating costs, investor interest, product suitability and other operational factors as reasons for the closure. In a liquidation plan filed with the U.S. Securities and Exchange Commission (SEC), it stated that maintaining the fund over the long term was not reasonable.
The gap in scale is also clear. Based on BlackRock’s product page, IBIT’s net assets as of Aug. 5 were $48.07 billion, more than 3,000 times DEFI’s AUM as of July 30. The comparison dates differ and the market outcome cannot be determined by one day’s inflows alone, but it has become clear that demand for the overall bitcoin spot ETF category and liquidation of individual small products can occur at the same time.
The cash that remaining investors will receive is not fixed at $14.7 million. Hashdex said liquidation expenses, trading costs and price fluctuations during the sale of remaining bitcoin will be reflected in the distribution amount. It also said the magnitude of price swings could be large.
Payment timing varies somewhat across disclosure documents. External notices and an attached document in a press release put the distribution around Aug. 28, but the main text of the Aug. 3 SEC filing and the liquidation plan indicated around Aug. 24. Based on the currently disclosed schedules, a late-August cash distribution is likely.
The liquidation applies only to DEFI, the sole series of the Hashdex Commodities Trust. Hashdex said the step is separate from the Hashdex Nasdaq CME Crypto Index ETF (NCIQ), and that the assets under management for its products offered to U.S. investors total more than $200 million.
The case showed that overall demand for the bitcoin spot ETF market and the survival prospects of individual products can differ. It highlighted that even in a market with continuing inflows, smaller ETFs can proceed toward liquidation if their operating scale and cost structure do not match.
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Yunseo Leeyslee@d-today.co.kr
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