VanEck to halt and liquidate its Ethereum ETF Futures due to declining market interest, poor performance, and regulatory uncertainty, causing a significant drop for ETH price.
VanEck, a leading investment management firm, has announced plans to shut down and liquidate its Ethereum Futures ETF (EFUT).
This move is seen as a significant blow to Ethereum’s price, which has already been experiencing volatility amid a broader market downturn.
The firm cited multiple reasons for its decision, including declining market interest and performance challenges.
VanEck to Cease and Liquidate Ethereum Futures ETF
In a recent statement, VanEck confirmed it will be closing and liquidating its Ethereum Futures ETF, which is listed on the CBOE exchange.
The decision follows an extensive review of the fund’s performance, liquidity, and investor demand.
According to VanEck, the EFUT has not met expectations, prompting the move to wind down the fund.
The company informed shareholders they can sell their EFUT shares on the CBOE exchange until September 16, 2024. After that, trading will cease, and the ETF will be delisted.
Any remaining investors will receive a liquidating distribution based on the net asset value of their holdings on or around September 23, 2024.
This decision underscores broader concerns regarding Ethereum futures, particularly in light of decreasing interest and reduced trading volume.
VanEck attributed the ETF’s underperformance to ongoing market challenges and low investor demand.
VanEck’s move also aligns with its broader strategy of streamlining its portfolio, particularly after the approval of its U.S. Spot Ethereum ETF.
The firm previously made a similar decision to wind down its Bitcoin Futures ETF following the launch of its U.S. Spot Bitcoin ETF earlier this year, reflecting a strategic shift towards spot market products.
Potential Impact on Ethereum’s Price
VanEck will distribute EFUT’s net assets to shareholders in cash as part of the liquidation process. The firm advised investors to be aware of potential tax consequences, as these distributions could result in recognized capital gains or losses.
The closure of EFUT highlights the wider struggles faced by Ethereum ETFs, which have struggled to attract sustained investor interest amid shifting market dynamics.
This liquidation comes at a time when Ethereum, the second-largest cryptocurrency by market cap, is under significant selling pressure in a broader market slump.
At the time of writing, Ethereum’s price had fallen nearly 4% to $2,284, while trading volume surged by 34% to $18.02 billion.
Ether Futures Open Interest also dropped 2.5% to $10.21 billion, signaling that investors remain cautious amid market volatility.
Recent analysis suggests that Ethereum could drop further, potentially reaching $2,000.
