VanEck liquidates its Bitcoin ETF: A setback for the crypto

VanEck is among the world’s leading ETF providers. It has just announced the end of its Bitcoin Strategy ETF (XBTF), launched in November 2020 on the CBOE BZX Exchange.

Now that our spot bitcoin ETF has been approved, we are closing our ETF that invested in bitcoin futures. https://t.co/pgf8NaKb4a

— VanEck (@vaneck_us) January 17, 2024

The stated reason: An underperforming and unattractive product

Since the beginning, VanEck has positioned itself as a staunch advocate for Bitcoin ETFs. According to VanEck, the decision to liquidate the fund was made after analyzing several factors:

• performance,
• liquidity,
• assets under management,
• investor interest.

The fund failed to attract enough capital. According to Morningstar data, it has only $3.2 million in assets under management as of January 14, 2024. The fund also showed a negative performance of -18.5% since its inception, while the price of Bitcoin increased by 64% over the same period.

Shareholders of the fund can sell their Bitcoin Strategy ETF shares on the CBOE until market close on January 30, 2024. Beyond this date, the fund will cease to accept creation orders.

Shareholders who still hold shares on the liquidation date, expected around February 6, 2024, will receive a cash liquidation distribution equal to the net asset value of their shares. This will generally result in a capital gain or loss for shareholders for tax purposes.

VanEck persists in its quest for a true Bitcoin ETF in the United States

The closure of VanEck’s Bitcoin Strategy ETF does not mean that the asset manager is giving up its ambition to launch a true Bitcoin ETF in the United States. VanEck asserts that it is convinced that Bitcoin ETFs are a legitimate investment product that should be available to Americans.

VanEck has also stated that it is open to other approaches to offering Bitcoin investment products to American investors.

VanEck’s decision to terminate its Bitcoin ETF (XBTF) appears to show that investor interest in this asset is not as great as it once was in the United States.