Hashdex's Smaller Bitcoin ETF Enters Liquidation Amid Strong Market Demand

Hashdex's bitcoin spot exchange-traded fund (ETF) product, DEFI, has entered liquidation procedures. On August 19, CryptoSlate reported that the product completed its last trading session on NYSE Arca on August 17 and halted new trade orders. The closure was announced earlier by Hashdex, which plans to sell remaining bitcoin, end operations, and return residual assets to existing investors through cash distributions.

The decision to close DEFI differs from the overall trend in the bitcoin spot ETF market, where demand remains strong with net inflows totaling $189.3 million on August 17. However, smaller products like DEFI are struggling to gain ground and have failed to secure investors, resulting in their liquidation.

As of July 30, DEFI's assets under management were approximately $14.7 million, a fraction of BlackRock's iShares Bitcoin Trust (IBIT) with net assets of $48.07 billion as of August 5. Hashdex cited factors such as asset size, trading liquidity, operating costs, investor interest, and product suitability in its decision to close DEFI.

The cash distribution to remaining investors will not be fixed at $14.7 million, but rather will reflect liquidation expenses, trading costs, and price fluctuations during the sale of remaining bitcoin. The timing of the distribution is expected to be around August 28, although there may be some variation depending on the documentation.