Hashdex announced the closure and liquidation of its Bitcoin ETF DEFI, marking the first liquidation of a U.S. spot Bitcoin ETF.

Written by: Nicky, Foresight News

On August 3rd, asset management firm Hashdex announced it would close and liquidate its Hashdex Bitcoin ETF (NYSE Arca: DEFI), the first spot Bitcoin ETF in the U.S. market to formally announce liquidation. As of July 30th, the fund had approximately $14.7 million in assets under management (AUM) and held around 225.58 Bitcoins. Hashdex stated that the closure decision was based on a comprehensive assessment of factors including AUM, trading liquidity, operational costs, and investor interest.

According to the official announcement, the last trading day for DEFI shares is August 17th, after which it will stop accepting subscription orders from authorized participants and delist from NYSE Arca. Shareholders who still hold shares as of the last trading day will receive cash liquidation distributions, expected to be paid around August 28th.

DEFI initially launched as a Bitcoin futures ETF in September 2022, being the first Bitcoin futures ETF in the U.S. registered solely under the 1933 Securities Act, co-launched by Hashdex in partnership with Teucrium Trading and Victory Capital. In January 2024, the U.S. Securities and Exchange Commission (SEC) approved applications for 11 spot Bitcoin ETFs including Hashdex's. In March of the same year, DEFI completed its transition from a futures strategy to a spot strategy and was officially renamed Hashdex Bitcoin ETF with a fee rate of 0.25%. Since its inception, the fund has delivered a cumulative performance of approximately 166%, but its AUM has remained low for a long time, with a historical peak of only about $17.54 million before falling again.

Marcelo Sampaio, CEO of Hashdex (Source: NYSE)

Hashdex is a global asset management firm focused on crypto asset index investing, founded in Rio de Janeiro, Brazil in 2018 by Marcelo Sampaio, Bruno Caratori, and others. In 2020, it collaborated with Nasdaq to develop the Nasdaq CME Crypto Index. In 2021, it launched products like HASH11 in Brazil, then expanded to European and U.S. markets. In February 2025, Hashdex launched the multi-asset crypto ETF NCIQ in the U.S., which currently tracks seven crypto assets. As of July 28, 2026, Hashdex's global crypto index products have over $888 million in AUM, covering eight countries.

While closing DEFI, Hashdex continues to advance other product innovations. On July 24th, the company filed documents with the SEC announcing that its NCIQ has been approved to conduct staking activities on the crypto assets held by the fund, with Coinbase Cloud as the initial staking service provider. According to the distribution plan, the portion of staking net income equivalent to up to 25 basis points annually of the net asset value (NAV) of ordinary shares belongs to the sponsor; for the excess portion, the sponsor gets 40% and holders get 60%.

According to BitBo data, as of August 4th, there are 13 spot Bitcoin ETFs in the U.S. market, holding a total of approximately 1.212 million Bitcoins, accounting for about 5.773% of the total Bitcoin supply, with a total AUM of around $77.7 billion. However, the capital distribution is extremely uneven: the top five products have an AUM of about $72.85 billion, occupying almost the entire market share.

BlackRock's iShares Bitcoin Trust (IBIT) holds approximately 737,000 Bitcoins with an AUM of around $47.25 billion, accounting for over 60% of the total market size, with a fee rate of 0.25%. Fidelity Wise Origin Bitcoin Fund (FBTC) holds about 171,000 Bitcoins with an AUM of around $10.96 billion, also with a 0.25% fee rate. Grayscale Bitcoin Trust (GBTC) holds around 133,000 Bitcoins with an AUM of about $8.5 billion; despite a high fee rate of 1.5% and long-term net outflows, it maintains its third position due to first-mover advantage and existing holdings. Grayscale's mini trust BTC holds about 59,000 Bitcoins with an AUM of around $3.78 billion and a fee rate of only 0.15%, absorbing a large amount of funds transferred from GBTC.

Bitwise's BITB (0.2%), ARK 21Shares' ARKB (0.21%), and VanEck's HODL (0.25%) have AUM between $1 billion and $2.4 billion, forming the mid-tier. Morgan Stanley's MSBT holds about 6,231 Bitcoins with an AUM of around $399 million, being the first Bitcoin ETP directly held by a Wall Street investment bank. Valkyrie's BRRR, Franklin's EZBC, and Invesco's BTCO have AUM between $340 million and $380 million. WisdomTree's BTCW has about $143 million. Hashdex's DEFI holds only around 225.6 Bitcoins with an AUM of about $14.46 million, ranking last.

Management Fee Ledger: Annual Revenue Can't Cover Operational Costs

The core revenue of ETF issuers comes from management fees, which are accrued daily as a percentage of the fund's AUM. Taking DEFI as an example: with a 0.25% fee rate and $14.7 million in AUM, annual management fee revenue is only about $36,700. Even at its peak AUM of $17.54 million, annual revenue was less than $44,000. The fixed operational costs of a spot Bitcoin ETF include custody fees (Bitcoin custody requires qualified custodians like Coinbase, which usually charge a few basis points of AUM plus fixed fees), legal compliance and auditing (SEC periodic reports, anti-money laundering reviews, annual audits, etc., costing hundreds of thousands of dollars annually), market making and liquidity management (small ETFs need to pay higher incentives to maintain reasonable spreads), exchange listing annual fees, director's liability insurance, and administrative management. Industry estimates put the minimum annual operational cost of an ETF at $500,000 to $1 million or more.

Even for Valkyrie BRRR and Franklin EZBC, which have AUM exceeding $300 million, their annual management fee revenue at the same rate is about $9 million, leaving profit margins after subtracting operational costs. For WisdomTree BTCW, with AUM below $150 million, annual management fee revenue is about $357,000, already on the edge of profitability. DEFI's annual revenue is only one-tenth of that, with an obvious operational gap. With continuous share shrinkage and no new capital inflow, it is not commercially sustainable for the issuer to continue covering operational costs, making liquidation a rational choice.

Hashdex DEFI's exit is not just about size numbers; the deeper reason lies in the structural disadvantages of the issuer's origin and customer acquisition capabilities in the U.S. market. Hashdex originated in Rio de Janeiro, Brazil, and has built strong brand recognition in Latin America and Europe, with its HASH11 once becoming Brazil's largest crypto index ETF. However, the U.S. ETF market is dominated by Wall Street giants. Institutional investors highly value brand trust, capital strength, and trading depth when choosing products. When established institutions like BlackRock, Fidelity, and Morgan Stanley launch similar products simultaneously, fund managers tend to choose these long-term partners rather than issuers from emerging markets that lack a traditional asset management foundation in the U.S.

This gap is more obvious in customer acquisition costs. Leading issuers have a large existing customer base: BlackRock and Fidelity cross-sell to existing customers through their own platforms and channels like pensions, endowments, and family offices, with extremely low marginal customer acquisition costs, even zero. Grayscale has accumulated years of crypto-native investors. Hashdex, however, needs to build its brand from scratch in the U.S.: every step, such as participating in industry conferences, maintaining data terminal displays, and sustaining market-making relationships, means high investment. At the same 0.25% fee rate, the dozens of times gap in revenue makes it impossible for Hashdex to invest the same resources in marketing and investor education.

If Bitcoin prices continue to rise, DEFI's AUM could improve with market price increases and new capital inflows, but the structural dilemma may not be fundamentally reversed. Assuming Bitcoin's rise drives AUM back to $50 million, annual management fee revenue could increase to $125,000, but the operational gap still exists. The real break-even point requires AUM to exceed $200 million, which needs a combination of net investor inflows and price increases. In the highly concentrated competitive landscape, new funds continue to flow to the top: BlackRock's IBIT has attracted tens of billions of dollars since its listing, and small ETFs often only get limited spillover even in a bull market. DEFI's AUM was only $17.54 million at Bitcoin's peak in 2025, which is clear evidence that the tailwind of a bull market is not enough to make up for the shortcoming in customer acquisition capabilities.

Beyond Hashdex: Which Small ETFs Are at Risk?

As of August 4th, WisdomTree BTCW ($143 million), Invesco BTCO ($348 million), Franklin EZBC ($370 million), and Valkyrie BRRR ($377 million) are the four smallest funds. Among them, BTCW is closest to the safety margin: with a 0.25% fee rate, annual management fee revenue is about $357,000. If its size continues to shrink, it may enter the loss zone, but WisdomTree, as an established ETF issuer, may continue to operate it for strategic considerations of maintaining product line integrity. Invesco, Franklin, and Valkyrie have AUM around $350 million, with annual management fee revenue of about $870,000, so they face little short-term survival pressure.

Before DEFI, there were precedents of Bitcoin-related ETFs being shut down in the U.S. market, but all were futures or other types. In January 2024, VanEck closed its Bitcoin futures ETF XBTF, which had an AUM of about $50 million at the time, because the company decided to concentrate resources after spot ETFs were approved. Earlier, in October 2022, Valkyrie's VBB was liquidated due to an AUM of only about $570,000.