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Asset manager VanEck has announced the closure of its futures-based Ethereum exchange-traded fund (ETF) due to diminishing demand, as spot cryptocurrency ETFs have increasingly captured market interest. The VanEck Ethereum Strategy ETF (EFUT) will cease trading on September 16, 2024, with its assets to be liquidated and returned to investors around September 23, 2024.
VanEck's decision to close the EFUT fund stems from several factors, including performance issues, liquidity concerns, assets under management, and overall investor interest. The move reflects a broader trend in the cryptocurrency {ETF} market where spot ETFs are gaining prominence over their futures-based counterparts.
In a related observation, Nate Geraci, president of The ETF Store, noted that the rise of spot crypto ETFs was anticipated to undermine the demand for futures-based crypto ETFs. Geraci had previously indicated that spot ETFs would likely render futures-based products less relevant.
The EFUT, which was launched in 2023, managed approximately $21 million in assets as of early September 2024. In contrast, VanEck's spot Ethereum ETF (ETHV), launched in June, has attracted over $55 million in assets. The disparity in performance underscores the growing preference for spot ETFs among market participants.
Since the Securities and Exchange Commission approved the launch of spot Ether ETFs in July 2024, these products have collectively amassed around $6.5 billion in assets under management. In comparison, futures-based Ether ETFs hold less than $170 million, according to data from Morningstar. The introduction of nine new spot Ether ETFs in July, including the Grayscale Ethereum Trust (ETHE), which manages nearly $4.2 billion, highlights the significant shift in market dynamics.
Futures-based ETFs, which use standardized contracts to replicate the performance of cryptocurrencies, often face challenges such as monthly contract expirations and rollover costs, leading to generally lower performance compared to spot ETFs.
{Crypto} currency ETFs have notably dominated the ETF market in 2024, with 13 of the top 25 largest ETF launches by year-to-date inflows being cryptocurrency-related.
