Beginning of the year 2024 saw a major integration between crypto and the major financial industry as the US Securities and Exchange Commission (SEC) approved the Exchange-Traded Fund (ETF). However, the fee war among US Bitcoin ETFs is now influencing the pricing of Bitcoin Exchange-Traded Products (ETPs) in Europe.
Bitcoin ETF to gain traction in Europe
According to reports, Coinshares, Wisdom Tree, and Invesco have recently announced major fee cuts for their Bitcoin ETPs in response to the competition from US Bitcoin ETFs. Prices for these ETPs were reduced by more than 50%. This move aligns them with the new competitive landscape introduced by the US ETFs.
While US Bitcoin ETFs are not directly accessible to European retail consumers, the increased competition has led to lower prices for investors. This fee reduction trend is expected to have a ripple effect. It could also impact fees at crypto exchanges, where some platforms currently appear relatively expensive.
Invesco and WisdomTree (key players in the ETF game) responded to an “unprecedented” influx of new ETFs in the US. They have cut fees by over 60% on their European Bitcoin products.
How it is impacting the market?
The fee reductions among US Bitcoin ETFs are notably significant. Ark Investment Management, which initially indicated a 0.8% pricing for its ETF, launched with no fees for the first six months or until assets reach $1 billion. However, after this period ARK will charge 0.21%. Similarly, BlackRock’s investors will have to pay 0.25%. The early investors access it at 0.12% for the first year until assets reach $5 billion.
In comparison, Bitcoin ETPs in Europe have generally higher fees. The average Total Expense Ratio (TER) for Europe’s ten largest ETPs/ETNs is 1.047%. This is more than double the average fee (after waiver) for the ten Bitcoin ETFs in the US, which stands at 0.451%. However, ETPs and ETNs in Europe are structured as debt securities, lacking the separate capital protection seen in ETFs.
The launch of ETFs linked to Bitcoin proved to be beneficial for the crypto market as BTC went on to breach the $49k price level. However, the biggest crypto saw a major slide as soon as the spot BTC ETF trading started. Grayscale Bitcoin Trust (GBTC) recorded highest outflow leading Bitcoin to bleed to the $39k price level.
