21Shares to Liquidate Bitcoin and Ether Futures ETFs Amid Market Decline

In a significant move reflecting the current state of the cryptocurrency market, 21Shares, a prominent crypto asset manager, has announced plans to liquidate two of its actively managed exchange-traded funds (ETFs) linked to Bitcoin and Ether futures. This decision comes as the broader market experiences a downturn, prompting investors to reassess their positions in the volatile crypto landscape.

Details of the Liquidation

The ETFs set for liquidation include the ARK 21Shares Active On-Chain Bitcoin Strategy ETF (ARKC) and the ARK 21Shares Active Bitcoin Ethereum Strategy ETF (ARKY). Investors will have the opportunity to trade shares of these funds until the market closes on March 27. The liquidation process is expected to occur “on or around March 28,” as per the official announcement.

Market Context and Outflows

This decision to liquidate comes at a time when U.S.-listed spot Bitcoin ETFs have experienced significant outflows, totaling over $1.66 billion this month alone. The ongoing decline in cryptocurrency prices has contributed to this trend, with Bitcoin witnessing a drop of more than 12.8% year-to-date. Meanwhile, the broader cryptocurrency market, represented by the CD20 index, has lost approximately 24% of its value during the same period.

Impact on Shareholders

For shareholders who choose to retain their shares until the liquidation date, they will receive payouts equivalent to their portion of the fund’s net asset value. This ensures that investors are compensated fairly as the funds are dissolved. The expense ratios for these actively managed ETFs are set at 1% for ARKC and 0.93% for ARKY, which are relatively competitive in the ETF market.

Expert Opinions on the Market Downturn

Market analysts have pointed to several factors contributing to the current downturn in the cryptocurrency sector. Increased regulatory scrutiny, macroeconomic pressures, and a general decline in investor sentiment have all played a role in the recent price drops. As more investors pull out of the market, the liquidity of these ETFs has been adversely affected, leading to the decision by 21Shares to liquidate.

Future of Cryptocurrency ETFs

The liquidation of these ETFs raises questions about the future of cryptocurrency ETFs in the U.S. market. While the initial enthusiasm for Bitcoin and Ether futures ETFs was high, the current market conditions have led to a reevaluation of their viability. Experts suggest that until there is a stabilization in cryptocurrency prices and a clearer regulatory framework, the appetite for such investment vehicles may remain subdued.

Conclusion

The decision by 21Shares to liquidate its Bitcoin and Ether futures ETFs is a clear indication of the challenges facing the cryptocurrency market today. As investors navigate this turbulent landscape, it remains to be seen how the market will evolve and whether new opportunities will arise in the future. For those interested in the ongoing developments in the cryptocurrency space, it is essential to stay informed and consider the implications of such market movements.

For more detailed insights, you can read the original article here.