21Shares is pulling the plug on two of its cryptocurrency ETFs amid a brutal market downturn. The company announced that both the ARK 21Shares Active Bitcoin Ethereum Strategy ETF (ARKY) and ARK 21Shares Active On-Chain Bitcoin Strategy ETF (ARKC) will be liquidated following a routine product review. Tough break for crypto enthusiasts who bought in.
The decision comes as no surprise to market watchers. U.S.-listed spot Bitcoin ETFs have hemorrhaged a staggering $1.66 billion in outflows. Yeah, that’s billion with a “B.” The writing was on the wall – these ETFs simply don’t align with 21Shares’ current strategy anymore.
Investors have until March 27, 2025, to sell their holdings. After that? Automatic liquidation. Any poor souls still holding shares on the liquidation date of March 28 will receive cash based on the net asset value. Minus expenses, of course. The company never misses a chance to collect those fees.
A ticking clock for ARKY and ARKC holders – sell by March 27 or get liquidated, minus those inevitable fees.
The crypto market’s volatility has been relentless. Competition in the crypto ETF space is heating up, regulations are shifting, and institutional investors are getting cold feet. It’s a perfect storm that’s sinking even established players.
Despite the setback, 21Shares insists its partnership with ARK Invest remains intact. They’re “committed” to U.S. crypto investment products. We’ll see how that plays out.
Meanwhile, the broader ETF landscape keeps evolving. Other issuers are filing for new crypto ETFs targeting XRP, HBAR, DOGE, and AVAX.
21Shares even reduced fees for its Bitcoin Ethereum Core ETPs to 0.49% – too little, too late for the liquidated funds.
CBOE is pushing for staking approval in Fidelity’s ETH ETF. Bitcoin Corporate Bond Convertible ETFs are gaining traction. Unlike traditional ETFs, investors could have alternatively used centralized exchanges to directly purchase cryptocurrencies with potentially lower fees. The industry keeps moving, even as some players retreat.
For investors affected by the liquidation, it’s decision time. Sell now or wait for automatic liquidation? Shareholders who choose to hold will receive a proportional equity distribution based on their investment, making this a critical decision point. Either way, the crypto ETF landscape just got a little smaller. The funds used futures contracts as part of their investment approach, rather than directly holding cryptocurrencies. Market reality bites.
