Investor Path Changes in Crypto: First Spot Bitcoin ETF in the US Liquidated

Crypto asset manager Hashdex has decided to close its DEFI fund, marking the first spot Bitcoin ETF liquidation in the US due to shifting investor interest toward AI projects and low liquidity.

An era is ending in the US spot Bitcoin ETF market; Hashdex announced it will liquidate its spot Bitcoin (BTC) exchange-traded fund, valued at $14.7 million. This closure, the first among spot products approved in January 2024, highlights the shifting direction of capital flows in the cryptocurrency market. The company explained that it reached this decision after evaluating the fund’s assets under management, operating costs, and investor demand.

According to a filing with the US Securities and Exchange Commission (SEC), the final trading day for the Hashdex Bitcoin ETF (DEFI) has been set for August 17. After this date, the fund will sell its Bitcoin holdings and distribute the resulting cash to shareholders. Entering the market nearly three months after its competitors, Hashdex struggled to compete in a low-liquidity environment due to its 0.25% transaction fee policy, which is identical to giants like BlackRock and Fidelity.

Investor Path Shifts from Crypto to Artificial Intelligence

Net outflows across the cryptocurrency market over the last three months indicate that investors are pivoting toward high-yield artificial intelligence (AI) focused investments. According to data, BlackRock’s AI-based ETF gained 39% through July, while the crypto market recorded a decline of approximately 36% during the same period. K33 Research analyst Vetle Lunde emphasizes that as the AI sector rises rapidly, the “opportunity cost” of holding Bitcoin has become too high for many investors.

Although Hashdex is withdrawing from the spot Bitcoin ETF market, it is not completely ending its presence in the US crypto ETF market. The company will continue to manage other crypto products worth over $200 million, including the Nasdaq Crypto Index ETF (NCIQ).