The end of the road for one ETF
Defiance Digital
The world’s first exchange-traded fund for non-fungible tokens (NFTs), the Defiance Digital Revolution ETF (NFTZ), is closing down. The fund, managed by Defiance ETFs, was launched in December 2021 and tracked companies involved in the NFT and cryptocurrency space, such as Funko, eBay, and Coinbase. The ETF was listed on the New York Stock Exchange, offering investors an opportunity to have a stake in NFT-related companies without having to physically store such assets.
NFTs are unique tokens linked to digital or physical content that gained popularity in 2021, with celebrities, major companies, and investors getting involved in the NFT market. The Defiance Digital Revolution ETF was intended to provide exposure to this growing market. However, the fund fell 11% to $21.66 from $24.41 in its first two days of trading, and with the recent decline in the price of Bitcoin and other cryptocurrencies, interest in the NFT space has waned.
Exchange-traded funds (ETFs) are investment vehicles that allow investors to expand their portfolios through shares, offering indirect exposure to an underlying asset. In July 2022, crypto exchange KuCoin launched its own NFT ETF, allowing users to own proportionally shared ownership of blue-chip NFTs.
Despite the closure of the Defiance Digital Revolution ETF, NFTs continue to be an area of interest for investors and companies. As blockchain and NFT technology continues to evolve, it is likely that new investment opportunities in the NFT space will emerge.
Bitcoin ETFs
In the U.S., Bitcoin futures ETFs have found a market, with the first one launching in October 2021 and selling nearly $1 billion on its debut. However, Bitcoin spot ETFs, which directly track the biggest digital currency, do not yet exist in the U.S. Several major crypto companies have applied to the SEC for approval to launch a Bitcoin spot ETF, but have only faced rejection thus far.
Several companies have attempted to launch Bitcoin ETFs (Exchange-Traded Funds) in the United States, but have faced rejection from the U.S. Securities and Exchange Commission (SEC). Bitcoin ETFs allow investors to have indirect exposure to the underlying asset, in this case Bitcoin, through shares, without having to physically store it. However, the SEC has yet to approve a spot market Bitcoin ETF due to concerns around market manipulation and the lack of regulation in the crypto industry. Despite several major crypto companies applying for approval, only Bitcoin futures ETFs have been approved and are currently available for trading in the U.S. market.
The closure of the Defiance Digital Revolution ETF highlights the challenges faced by investment funds in the NFT space, particularly in a market that is still in its early stages. Nevertheless, the potential for growth and innovation in the NFT market remains, and it will be interesting to see how the industry develops in the coming years.
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