VanEck Shutters Bitcoin Futures ETF

VanEck is closing its bitcoin futures ETF, barely a week after the launch of its spot bitcoin exchange-traded fund and following millions in outflows in the runup to the launch of the spot fund.  

The VanEck Bitcoin Strategy ETF (XBTF) will stop trading on Jan. 30, according to a company press release. New York-based VanEck, which manages $66.4 billion in 69 ETFs, said in the statement it’s closing the fund based on an analysis of its performance, investor interest, liquidity, assets under management and other factors.

The futures fund is up 97% over the past year and has $69 million under management according to etf.com data. Yet investors pulled $14.8 million from the fund since Dec. 1 as federal regulators’ deadline to approve a spot bitcoin ETF approached. Investors drained $10 million from the ETF in a single day on December 26 and drew down another $2 million on Jan. 15. 

The arrival of spot bitcoin ETFs had sparked speculation about whether or not futures-based bitcoin ETFs, which have about $2 billion in assets, will survive. VanEck suggested that it had anticipated investors' preferences would transition to the spot funds.

"We believe investor appetite would switch from products offering bitcoin futures exposure to direct bitcoin exposure (such as HODL),"  VanEck director of digital assets product Kyle DaCruz wrote in an email. "VanEck spot products should more closely track the price of bitcoin, as they don’t incur the costs associated with rolling futures contracts."

Futures ETFs also were expected to face competition from the lower fees spot funds charged.

“Though they’ve delivered strong returns over the past year, bitcoin futures ETFs suffer from higher costs than their spot bitcoin ETF counterparts,” said etf.com analyst Sumit Roy. “In particular, roll costs—or the cost of rolling from one futures contract to another—have dampened the ETFs’ returns.”  

While ETFs that track bitcoin futures have been trading since 2021, the Securities and Exchange Commission only last week approved the novel spot bitcoin ETF, which is physically backed by bitcoin and more closely tracks the asset. 11 funds were approved by the SEC, including ETFs from traditional players such as Fidelity and BlackRock. The VanEck Bitcoin Trust (HODL) started trading last Thursday, Jan 11.  

BITO’s First Mover Advantage   

The largest bitcoin futures ETF is the ProShares Bitcoin Strategy ETF (BITO), which saw huge first mover advantage from being the first futures product to hit the market.  

“While most bitcoin futures ETF will likely shutter, BITO has been remarkably resilient so far and still boats nearly $2 billion in assets under management, a reflection of its strong liquidity and first-mover advantage,” said Roy.  

Contact Lucy Brewster at [email protected].