Breaking: VanEck To Cease And Liquidate Ethereum ETF Futures Amid Waning Market

The leading investment management firm, VanEck has disclosed its plans to cease and liquidate its Ethereum ETF Futures (EFUT). This marks a major setback for ETH price, which was already going through a volatile trading phase amid a broader market downturn. The ETF issuer has cited a flurry of reasons like waning market interest, performance woes, and others, as the primary reasons behind the decision.

VanEck To Close & Liquidate Ethereum ETF Futures

In a recent update, VanEck said that it is closing and will liquidate its Ethereum Futures ETF, listed on the CBOE exchange. The company’s decision follows a detailed review of its product offerings, focusing on factors like liquidity, performance, and overall demand from investors. According to the ETF issuer, the EFUT has failed to meet their expectations, which led to the decision to wind down the fund.

Meanwhile, the firm has notified that the shareholders would be allowed to sell their EFUT shares on the CBOE exchange with September 16, 2024 as the deadline. After this date, the trading will stop and the ETF will be delisted. However, after this date, any investor holding the shares will receive a liquidating distribution based on the net asset value of their holdings on the anticipated liquidation date of September 23, 2024.

In addition, the decision also highlights broader concerns over the market sentiment for Ethereum futures, especially amid declining interest and shrinking trading volume. The firm said that ongoing market challenges and low investor demand have weighed on the Ether ETF’s performance.

However, VanEck’s recent decision is also driven by strategic portfolio streamlining, after the approval of its US Spot Ethereum ETF. This move mirrors the firm’s earlier decision to wind down its Bitcoin Futures ETF following the greenlighting of its US Spot Bitcoin ETF in January, suggesting a deliberate shift towards spot market offerings.

ETH Price To Face Further Selling Pressure?

The liquidation process will involve distributing the net assets of EFUT to shareholders in cash, according to the update. It could affect the investors who are holding shares in their brokerage accounts.

However, VanEck clarified that any final income and capital gains not previously distributed will be included in the liquidation proceeds. The firm has advised the shareholders to consider the tax implications of these distributions, as they may result in recognized capital gains or losses.

The termination of EFUT highlights the broader challenges faced by Ethereum ETFs, which have struggled to maintain investor enthusiasm amidst fluctuating market dynamics. In addition, it also comes amid a time when the second-largest crypto market cap is facing immense selling pressure amid a broader market downturn.

As of writing, ETH price was down nearly 4% to $2,284, with its trading volume soaring 34% to $18.02 billion. Simultaneously, Ether Futures Open Interest fell 2.5% to $10.21 billion, indicating that the investors are staying on the sideline amid the volatile phase. In addition, a recent Ethereum price analysis suggests that the crypto could witness a dip to $2,000.