VanEck Closes Bitcoin Futures ETF: Lackluster Launch Puts XBTF Out to Pasture

VanEck

The VanEck Bitcoin Strategy ETF (XBTF), once a hopeful contender in the crypto investment field, is set to be delisted on January 30th, 2024. This swift closure, a mere week after the launch of VanEck’s spot Bitcoin ETF, highlights the shifting sands of the cryptocurrency market and the intense competition for investor attention.

XBTF’s Short-Lived Journey

XBTF, a futures-based ETF, tracked Bitcoin price through investments in Bitcoin futures contracts. While it enjoyed relative success over the past year, averaging $1.4 million in daily trading volume, it was ultimately overshadowed by the ProShares Bitcoin Strategy ETF (BITO), which boasted a first-mover advantage and significantly higher volume.

As Bloomberg ETF analyst James Seyffart aptly points out, the ETF industry often plays by the “winner takes most” rule. Investors gravitate towards high-volume ETFs due to easier liquidity for large-scale trading, leaving latecomers like XBTF struggling to attract meaningful traction.

Shifting Tides

In response to the closure, VanEck has promised cash distributions to XBTF investors based on their net asset value upon liquidation. However, for tax purposes, this may translate to capital gains or losses depending on individual adjusted basis for shares.

The story takes a different turn with VanEck’s newly launched Bitcoin spot ETF, the VanEck Bitcoin Trust (HODL). Launched alongside several other spot ETFs last week, it has managed to secure a middle-ground position in terms of volume and inflows. This seemingly more level playing field within the spot ETF category offers a glimmer of hope for VanEck’s future in the Bitcoin investment space.

Key Takeaways:

  • VanEck’s Bitcoin Strategy ETF (XBTF) closes due to low volume and investor interest.
  • The closure follows the launch of VanEck’s spot Bitcoin ETF, HODL.
  • Simultaneous launch of spot ETFs creates a fairer playing field compared to the staggered rollout of futures-based ETFs in 2021.
  • VanEck’s HODL performs modestly in the new landscape.

While the closure of XBTF reflects the challenges of latecomers in the futures ETF market, the success of HODL amidst the spot ETF launch wave suggests a promising future for direct Bitcoin ownership through ETFs.

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