Despite growing demand for Bitcoin worldwide in recent months, Bitcoin spot ETFs in the United States have outperformed their global competitors, leading to their success while others have lagged behind.
Bitcoin ETFs in Europe Are Losing Money
According to Morningstar data, spot Bitcoin ETPs in Europe have had net outflows of $500 million annually up to this point, as reported by the Financial Times.
However, throughout that period, net inflows into "crypto" ETPs for Ether and other cryptocurrencies have only totaled $42 million, which hasn't done much to offset the ETP losses of their institutionally dominating older sibling.
However, the price of Bitcoin has increased by 54% in that time, indicating that demand for the cryptocurrency has only grown globally. The head of WisdomTree's quantitative research and multi-asset solutions, Pierre Debru, claims that since January, client inquiries regarding the European Bitcoin investment products have "greatly increased."
The long-awaited approval of Bitcoin spot ETFs in the US occurred in January, providing institutional investors in the US with better access to spot price exposure. With the help of BlackRock and Fidelity's Bitcoin trusts, the U.S. funds have taken in a total of $13.6 billion in net inflows since going online on January 11.
Particularly, the latter two funds have extremely low yearly management fees of just 0.25%, which is far less than their previous international rivals. Debru claimed that as a result, US ETFs had "created a new fee environment in Europe," forcing providers there to lower their prices in order to remain competitive.
The Fee War for Bitcoin ETFs Is Essential
On the other hand, people who won't cut their fees have been bleeding continuously. The biggest example is the Grayscale Bitcoin Trust (GBTC), a different US fund that converted in January of this year and levied a 1.5% charge for being an ETF for Bitcoin.
The fund lost more than half of its Bitcoin assets after beginning with more than 630,000 BTC, and BlackRock has already usurped its claim as the largest Bitcoin ETF globally.
Comparably, the first and biggest Bitcoin ETF in the world prior to January, Canada's Purpose Bitcoin ETF (BTCC), now only possesses 27,052 BTC, down from 35,706 BTC on January 5. The fund levies a management fee of 1%.
Since January, there have been minimal net inflows into VanEck's local Bitcoin and Ethereum ETNs, according to CEO of the company's European operations Martijn Rozemuller. One of the 10 Bitcoin funds that were introduced in the US in January was founded by VanEck.
According to Rozemuller, "When total potential market size is taken into account, European crypto ETPs are still relatively larger than the spot bitcoin ETFs in the US" (FT).
May 2024, Cryptoniteuae