VanEck to Liquidate Ethereum ETF Futures as Market Sentiment Weakens
VanEck, a prominent investment management firm, has announced its intention to discontinue and liquidate its Ethereum ETF Futures (EFUT), dealing a blow to ETH’s price amid ongoing market turbulence. The decision to wind down the EFUT was driven by factors such as diminishing market interest and underperformance, according to the ETF issuer.
The company’s move to close and liquidate its Ethereum Futures ETF listed on the CBOE exchange follows a thorough evaluation of its product lineup, with a focus on liquidity, performance, and investor demand. VanEck expressed disappointment in the EFUT’s failure to meet their expectations, prompting the decision to terminate the fund.
Shareholders have been informed that they can sell their EFUT shares on the CBOE exchange until September 16, 2024, after which trading will cease, and the ETF will be removed from the exchange. Subsequently, investors holding shares beyond this date will receive a liquidating distribution based on the net asset value of their holdings as of the anticipated liquidation date on September 23, 2024.
The broader concerns surrounding Ethereum futures market sentiment have been exacerbated by declining interest and dwindling trading volumes, leading to challenges for Ether ETF performance. VanEck’s strategic portfolio streamlining, following the approval of its US Spot Ethereum ETF, mirrors its previous decision to wind down its Bitcoin Futures ETF after the green light for its US Spot Bitcoin ETF earlier in the year, signaling a deliberate shift toward spot market offerings.
The liquidation process for EFUT will involve distributing the net assets to shareholders in cash, potentially impacting investors holding shares in their brokerage accounts. Notably, any remaining income and capital gains not previously distributed will be included in the liquidation proceeds, with shareholders advised to consider the tax implications of these distributions, which may result in recognized capital gains or losses.
The termination of EFUT underscores the broader challenges faced by Ethereum ETFs, struggling to maintain investor interest amidst fluctuating market conditions. This development coincides with significant selling pressure on the second-largest cryptocurrency by market cap amid a broader market downturn.
At the time of reporting, ETH price had declined by nearly 4% to $2,284, with trading volume surging by 34% to $18.02 billion. Concurrently, Ether Futures Open Interest decreased by 2.5% to $10.21 billion, signaling investor caution during the volatile phase. Additionally, an analysis of Ethereum price trends suggested a potential dip to $2,000.
