Hashdex Bitcoin ETF to shut down following low liquidity

Hashdex Asset Management stated on Wednesday that it will liquidate and close the Hashdex Bitcoin ETF (DEFI), due to low assets under management, limited liquidity and operating costs.

Hashdex to shut down DEFI amid low trading liquidity and investor demand

The fund managed approximately $14.7 million in assets as of July 30, according to a statement on Wednesday. Hashdex said the decision follows a review of its product lineup, during which it assessed factors including assets under management (AuM), trading liquidity, investor demand, operating costs and how the ETF fits within its broader index-based investment offerings.

The firm's other US investment products remain unaffected and collectively manage more than $200 million in assets.

Hashdex noted that shareholders can continue trading DEFI shares on NYSE Arca until the market closes on August 17, after which the ETF will stop accepting creation orders from authorized participants, cease trading and be delisted from the exchange.

Investors who continue holding shares through August 17 will automatically receive a cash distribution, which is expected to be paid on August 28.

The distribution will equal each shareholder's proportionate share of the fund's net asset value after accounting for liquidation expenses, transaction costs and any changes in Bitcoin's price during the wind-down period. Hashdex noted that fluctuations in Bitcoin's market price before liquidation could materially affect the final payout.

Following the last trading day, the fund will sell its remaining Bitcoin holdings and discontinue its investment strategy. Its activities will be limited to winding up operations, settling liabilities and distributing remaining assets to shareholders.

Hashdex stated that the liquidation is intended to provide an orderly return of capital while meeting the operational requirements involved in closing a commodity-based ETF.

DEFI saw cumulative net inflows of $4.27 million since it was converted to a Bitcoin ETF in March 2024, according to SoSoValue data. The fund has barely recorded any activity over the past month, with daily trading volumes averaging $131,000.

In comparison, the cumulative net inflow of all US spot Bitcoin ETFs is at $51.71 billion, with a total trading volume of $1.57 billion on Tuesday.

The closure comes as competition in the US spot Bitcoin ETF market continues to intensify. While the largest Bitcoin ETFs have attracted billions of dollars in assets since launching, smaller funds have faced increasing pressure to achieve scale, maintain trading liquidity and manage operating costs.

Hashdex emphasized that the decision only affects the DEFI ETF and does not impact its broader digital asset investment business or other products available to US investors.