《Ethereum is going to fail? VanEck closes and liquidates its ETH ETF》

Tonight VanEck has announced that it will close its Ethereum ETF. Many people are wondering if Ethereum is going to fail? Let me give you a detailed breakdown.

First, it reflects several key points:

1. Insufficient market demand: VanEck made this decision based on many considerations, including the fund's performance, liquidity, assets under management (AUM), and investor interest. The low trading volume and investor participation of the ETF may be one of the main reasons for the liquidation.

2. Operating costs are disproportionate to returns: For ETF management companies, the operating costs of maintaining low-demand products may be higher than the returns, especially for highly volatile products such as cryptocurrency futures. If the fund lacks sufficient liquidity in the market or performs poorly, it may not make economic sense to continue operating.

3. Fierce market competition: The cryptocurrency market has expanded rapidly in the past few years, and multiple similar products (including Bitcoin and Ethereum futures ETFs) have emerged. VanEck's move may be to optimize its product line and focus resources on better-performing funds or innovative products.

Potential impact:

1. Short-term market volatility:

Fund liquidation may lead to some short-term market selling pressure. The fund liquidation process may involve selling futures contracts held by the ETF, thereby increasing the market selling volume of Ethereum and causing a short-term drop in prices.

2. Market confidence impact:

Since the liquidation of ETFs is generally regarded as a signal of insufficient market demand or liquidity, some investors may reduce their confidence in the Ethereum market. This may cause some investors to withdraw funds, further exacerbating the price drop.

3. Small long-term impact:

Although ETF liquidation will have a certain short-term impact on the market, Ethereum, as a widely used blockchain platform in the world, is more driven by the long-term fundamentals of the ecosystem such as technological development, decentralized finance (DeFi) and NFT. Therefore, it may not have a significant impact on the long-term price of Ethereum.

Not too bad:

VanEck's ETF is only 54M in size, which is a relatively small ETF. At today's price of $ETH , it is about 23,000, which has limited impact on the market price.As long as there are no other families following, it will be fine.

Don’t panic too much $ETH