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First NFT Exchange-Traded Fund Announces Closure as Market for Non-Fungible Tokens and Metaverse Assets Cool Down

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Ruholamin Haqshanas

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Ruholamin Haqshanas

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Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

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Last updated:

June 26, 2023

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The first-ever exchange-traded fund focused on NFTs and metaverse assets has announced closure as the crypto winter continues to claim more victims.

The Defiance Digital Revolution ETF, which is listed on the NYSE under the ticker NFTZ, will close down by the end of February, according to a recent press release. The fund will begin liquidating its portfolio assets starting February 16, and won’t accept orders for new creation units after that day.

“Prior to the Liquidation Date, shareholders may only be able to sell their shares to certain broker-dealers, and there is no assurance that there will be a market for the Fund’s shares during that time period,” the announcement said.

Launched in December 2021, the fund is provided by Defiance ETFs and is built to track the BITA NFT and Blockchain Select Index, an index that tracks blockchain-related companies and non-fungible tokens. Shares in the fund are down by more than 72% since its debut.

The fund’s closure comes as the hype over NFTs and metaverse assets has cooled down dramatically over the past year amid the broader market downturn that has seen major cryptocurrencies like Bitcoin and Ethereum lose around 70% of their value compared to all-time highs.

According to NFT experts at Casinos En Ligne, sales of non-fungible tokens saw a downfall of 83 percent year-over-year in 2022. Moreover, across all the markets, including art, gaming, and collectibles, NFT transaction volume plunged by at least 83 percent.

The NFT space surged to an all-time high in January 2022 with monthly sales reaching $2.8 billion. However, that number saw a steep drop by earlier this year following a string of bankruptcies and implosions that saw around $2 trillion wiped out of the crypto market.

Despite the bloodbath in the NFT market, a number of high-profile companies have announced plans to expand both into NFTs. Just recently, Amazon revealed that it plans to launch a “digital assets enterprise” focused on non-fungible tokens and Web3 gaming this spring.

In November, a patent filing revealed Sony’s vision for a system that could be used to track the creation, use, and transfer of digital assets created within a game. The patent envisions a system for “creating, modifying, tracking, authenticating, and/or transferring unique digital assets” associated with video games.

Furthermore, investment giant Fidelity also hinted at an intent to push deeper into cryptocurrencies and Web3 with three new trademarks filed in December last year. The filings have a focus on NFTs and virtual worlds like the Metaverse.