The Bitcoin ETF market may start a “cruel fee war”

With two U.S.-listed ETFs linked to Bitcoin futures unveiled on Wall Street last week, the once seemingly remote possibility is now accelerating to become a reality.

An ETF is an investment tool that tracks the performance of one or a group of assets. Take the Bitcoin futures ETF as an example. The specific asset is a Bitcoin futures contract traded on the Chicago Mercantile Exchange (CME). Currently, CME is the only compliant trading platform in the United States that provides such products.

ProShares Bitcoin Strategy Fund (ProShares Bitcoin Strategy Fund) is the first Bitcoin futures ETF listed in the United States. It was listed on the New York Stock Exchange (NYSE) on Tuesday, October 19. Following that, Valkyrie’s Bitcoin strategy ETF was listed on the Nasdaq on Friday, October 22.

Although ETFs provide individual investors with the benefits of diversification, protection and liquidity without the need to hold relevant assets, they all have annual management fees, which is an important consideration for any savvy investor aspect.

Both ProShares and Valkyrie funds charge a fee of 95 basis points (0.95%), which means that investors must pay a fee of US$9.5 for every US$1,000.

ProShares ETF (BITO) attracted the attention of a large number of investors, and the fund’s trading volume reached nearly $1 billion on the first day. According to Bloomberg News, Valkyrie’s ETF (BTF) underperformed a lot, with a trading volume of slightly less than US$80 million on the first day.

With VanEck’s Bitcoin futures ETF- the third Bitcoin futures ETF approved by the US SEC-will be listed on the New York Stock Exchange as early as Monday, the situation may become more interesting.

Why do you say that? Because VanEck’s Bitcoin Strategy ETF (XBTF) has a rate of 0.65%, which is much lower than the rates of ProShares and Valkyrie, investors may prefer cheaper products.

“After all, Bitcoin futures ETF is a commodity.” Nathan Geraci, president of ETF Store, told the Financial Times. “Cost is very important. I expect a cruel fee war will be staged in this area.”

Geraci added that VanEck’s launch of XBTF “is the beginning of a ruthless, ongoing fee competition.”

VanEck’s management fee is also lower than the 95bp charged by WisdomTree Bitcoin ETP ( BTC W). BTCW is the lowest-cost physical support Bitcoin exchange-traded product (ETP) in the European market.

According to data from TrackInsight, the only cheaper Bitcoin-themed ETF in the world is CI Galaxy Bitcoin ETF (BTCX), a Bitcoin spot ETF listed in Canada with a rate of 0.40%.

Although Valkyrie’s fees are higher and the trading volume on the first day of listing is slightly lower, the company’s CEO Leah Wald has made it clear that she is more inclined to focus on long-term development.

In an interview with Yahoo Finance, Wald said: “ We believe that demand is strong enough. As long as there is enough time, the AUM of two or three Bitcoin futures ETFs will be roughly the same. Then investors will finally decide which company is best for their assets. They will eventually lead the way. “

As the October 31st deadline for the U.S. SEC’s response is approaching, Mike Novogratz’s Galaxy Digital may become the next company to obtain approval for a Bitcoin futures ETF application. However, the original document of the Galaxy Bitcoin Strategy ETF did not specify how much the management fee will be.

Posted by:CoinYuppie,Reprinted with attribution to:
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