Asset manager Hashdex will scrap its bitcoin spot exchange-traded fund and start liquidation procedures.

On Aug. 4 local time, blockchain outlet Decrypt reported that Hashdex's bitcoin spot ETF product, DEFI, has about $14.7 million in assets under management, and trading will end after the market close on Aug. 17.

The fund will then be delisted, and cash is expected to be distributed to shareholders around Aug. 28. Hashdex plans to sell its remaining bitcoin holdings and then settle the remaining assets.

The company specified in filings submitted to the U.S. Securities and Exchange Commission that it will liquidate any remaining bitcoin holdings after the final trading day and then conduct no business activities other than winding down operations, preserving asset value, repaying debts and distributing remaining assets to shareholders.

The decision comes about 2 years after it entered the bitcoin spot ETF market. Hashdex said it reviewed factors including assets under management, trading liquidity, operating costs, investor interest and the product's position within its overall lineup in deciding to liquidate. The company added that it continues to manage more than $200 million across investment products for U.S. investors.

An ETF is a fund that can be bought and sold like a stock on an exchange, and this product is structured to track the price of bitcoin. As a result, the final cash distribution amount may differ from the fund's current value because bitcoin prices may fluctuate while Hashdex sells the underlying assets.

Hashdex's exit coincides with intensifying competition in the bitcoin spot ETF market. Hashdex entered the market in earnest after the SEC approved the first bitcoin spot ETF in January 2024. In March 2024, it converted an existing bitcoin futures ETF into a spot ETF. That futures ETF had traded under the ticker DEFI since September 2022 and held about 5,500 BTC as of August 2023. It later sought to expand U.S. offerings with an ETF that includes both bitcoin and ether, but the SEC postponed a decision on the proposal in August 2024.

Ultimately, the liquidation has led to a result of failing to draw sufficient funds and liquidity in the bitcoin spot ETF market. Hashdex will wind down the fund, clear its remaining bitcoin assets and return cash to shareholders.