Defiance ETFs, in partnership with Tidal Financial Group, has announced the liquidation of eight Nasdaq-listed exchange-traded funds (ETFs), including the Defiance Leveraged Long + Income Ethereum ETF (ETHI). The Board of Trustees has sanctioned the closures as part of a strategic realignment to better serve current market trends and investor interests.
Trading for these ETFs will cease on January 26, 2026, with the final liquidation and cash redemptions at net asset value (NAV) scheduled for January 30, 2026. The decision highlights a strategic pivot in ETF management, moving away from complex, leveraged crypto products that have struggled to gain traction.
The ETHI ETF, launched with considerable fanfare on September 19, 2024, will be delisted after a brief four-month lifespan. The fund employed a complex multi-layered strategy, using financial derivatives to seek 2x leveraged returns linked to Ethereum futures while simultaneously selling call options to generate income. This structure, aimed at sophisticated traders, faced persistently low assets under management (AUM) and trading volume, making it economically unviable.
Market analysts note this move reflects broader challenges for niche, leveraged crypto products in attracting sustained capital. "This delisting reflects the steep challenges niche, leveraged crypto products face in attracting sustained capital," observed a report from Bloomberg Intelligence. The current regulatory environment, with the SEC maintaining a cautious stance on crypto derivatives beyond basic spot Bitcoin funds, likely contributed to the product's struggles.
The liquidation of ETHI follows a pattern within the digital asset ETP space, where several niche funds have been shuttered due to poor demand, signaling a market consolidation towards simpler, more liquid products. The investment community's focus has decisively shifted toward spot products following the landmark approval of spot Bitcoin ETFs in early 2024.
For current investors, the creation of new shares has been halted. They can sell positions on the open market until the delisting date, after which Defiance will liquidate the fund's assets and distribute cash proceeds. The event is seen as more symbolic for the Ethereum ecosystem, given the fund's small size, but it signals the fraught path for complex Ethereum-based investment products. All eyes remain on applications for a spot Ethereum ETF, which would offer straightforward, non-leveraged exposure.
