Valkyrie to Liquidate Bitcoin Balance Sheet ETF following Low Customer Demand

Valkyrie Funds LLC, a digital asset ETF issuer in the US, announced Tuesday that it will liquidate one of its exchange-traded funds (ETFs) that invests in innovative public companies with exposure to Bitcoin.

The digital assets manager said it would shut down the Valkyrie Balance Sheet Opportunities FUND (Nasdaq: VBB) at the end of this month and then be delisted from Nasdaq, where it has traded since December 2021.

Any investor who holds shares of the fund at liquidation will get a cash redemption equal to the net asset value (NAV) of their claims, according to a filing with the Securities and Exchange Commission on Tuesday.

Valkyrie termed the fund’s dissolution as the best course of action, stating that the move was part of an ongoing review of products to ensure the company best meets customer demands.

The firm said the action was taken after thoroughly consulting the company’s Board of Directors. They determined that discontinuing the fund was the best course of action for all those involved.

Customers never showed much interest in Valkyrie’s second ETF, where the largest positions are MicroStrategy (MSTR) and Tesla (TSLA), firms known for holding Bitcoin on their balance sheets. According to the report, net assets under the fund’s management are only about $570,000 as of now.

Investors may trade shares up until the end of the trading day on October 28. Valkyrie said it would satisfy expenses related to the liquidation, the distribution of cash proceeds, and brokerage expenses.

Last December, Valkyrie Balance Sheet Opportunities ETF aimed to invest primarily in companies that invest in, transact in, or have exposure to the Bitcoin asset class on their balance sheets or those that operate within the Bitcoin ecosystem. The fund is the second in a family of Valkyrie’s ETFs designed to enable investors to participate in the digital asset landscape.

The fund’s discontinuation happens when many investors are still interested in Bitcoin investments despite the market downturn. According to a recent survey, more than 80% of financial advisers in the US are being asked about cryptocurrencies, but many struggles to allocate clients effectively to this asset class. With many publicly traded companies in the US already holding Bitcoin and more corporations, entities, and countries increasingly entering the space, investing in these companies provides indirect exposure that many individuals are seeking.