Hashdex Liquidates First US Spot Bitcoin ETF as AI Hype Drains Crypto Inflows

Woofun AI reports that Hashdex is initiating the liquidation of its spot bitcoin ETF, marking the first closure of its kind in the United States, driven by a structural shift in capital toward AI-related investments.

The fund, holding $14.7 million in assets, joins a history of closures that previously included only futures-based products like VanEck’s XBTF in 2024, but no U.S. fund holding bitcoin directly has ever been liquidated before. Hashdex cited a comprehensive evaluation of assets under management, liquidity, operating costs, investor interest, and the product’s fit within its broader lineup as the rationale for this decision, signaling that operational viability is now outweighed by market dynamics.

Flows into these ETFs, which were first approved in January 2024, have dwindled as investors chased the better returns offered by AI-related investments, resulting in net outflows for the sector in each of the past three months according to data. K33 Research head Vetle Lunde noted in a June report that 'Much of the market views the opportunity cost of holding BTC as too high while anything AI-related soars,' a sentiment reflected in BlackRock’s iShares Future AI & Tech ETF gaining 39% through July with $3.6 billion in assets, while the crypto market fell roughly 36% based on the CoinDesk 20 (CD20) Index.

Woofun AI data shows that the Hashdex Bitcoin ETF (DEFI) stands as the smallest U.S. spot bitcoin ETF by net assets and recorded the lowest cumulative net inflows, highlighting its vulnerability compared to larger peers. WisdomTree’s BTCW, the second-smallest, holds $142.4 million in net assets, whereas market leader BlackRock’s IBIT commands $47.08 billion, illustrating the extreme concentration of capital in the largest funds and leaving smaller players like Hashdex exposed to liquidity shocks.

DEFI’s final day of trading will be Aug. 17, after which it will start selling its remaining bitcoin and distribute the cash proceeds to shareholders, according to a filing with the U.S. Securities and Exchange Commission (SEC). This individual failure contrasts sharply with the broader U.S. spot bitcoin ETF market, which holds $77.6 billion in net assets and has received a cumulative $51.5 billion in net inflows over its lifetime, suggesting that the liquidation is an outlier rather than a systemic collapse.

Hashdex entered the spot bitcoin market later than competitors, introducing DEFI as a bitcoin futures ETF in September 2022 and converting it to a spot product in late March 2024, nearly three months after IBIT’s launch. The 0.25% expense ratio matched those charged by BlackRock and Fidelity, offering no fee discount for choosing a smaller, less liquid product, while international precedents like Cosmos Asset Management’s November 2022 closure of Australia-listed funds with only 1.1 million Australian dollars ($710,000) in assets warn of similar risks for underperforming vehicles.

Total inflows have heavily favored leaders, with $60.5 billion moving to IBIT and roughly $9.95 billion to Fidelity’s FBTC, while Grayscale’s GBTC has seen $27.47 billion in outflows. Hashdex remains in the market with over $200 million in other products, including the Hashdex Nasdaq Crypto Index US ETF (NCIQ), indicating that the liquidation is a strategic pruning rather than a retreat from the U.S. crypto ETF space.