As an analyst with a background in finance and experience in the cryptocurrency industry, I believe that European Bitcoin exchange-traded products (ETPs) are losing customers due to intense competition from US-based Bitcoin ETFs. The data from Morningstar highlights this trend, with net outflows of over $500 million for European Bitcoin funds since January, despite the rising demand for Bitcoin itself during that period.
European Bitcoin ETPs have experienced significant losses in 2023 as intensified competition from US-based counterparts took hold.
European Bitcoin funds experienced a significant withdrawal of approximately $500 million according to data from Morningstar. Contrastingly, the desire for Bitcoin has grown steadily throughout January.
Why Are Europe’s Bitcoin ETFs Losing Customers?
In the same timeframe, Ethereum trading pairs for Exchange-Traded Products (ETPs) recorded inflows of approximately $42 million. However, these inflows went against the Bitcoin ETP outflows of similar value, exacerbating the overall crypto market downturn instead of offsetting it.
In an interview with the Financial Times, Pierre Debru, who heads quantitative research and multi-asset solutions at WisdomTree, noted a significant surge of demand from clients for European cryptocurrency exchange-traded products (ETPs) following the launch of US Bitcoin ETFs in January.
Yet, the very same exchange-traded funds (ETFs) have sparked unparalleled competition, leading to “a new fee landscape in Europe” and compelling European ETF issuers to reduce their fees.
As a crypto investor, I’m always on the lookout for cost-effective ways to add Bitcoin exposure to my portfolio. Two leading asset managers, BlackRock and Fidelity, have recently introduced Bitcoin ETFs, managing the first and third largest ones respectively. They charge an annual management fee of 0.25%, which is quite reasonable in the crypto space. Plus, they occasionally offer tempting discounts for early adopters, making it an attractive option for those looking to invest in Bitcoin through a reputable ETF provider.
European Bitcoin Exchange-Traded Product (ETP) providers, such as Invesco, WisdomTree, and CoinShares, have promptly reduced their fees from levels exceeding 0.9% to under 0.4%.
As a researcher studying the world of exchange-traded funds (ETFs), I’ve noticed an intriguing development. Fidelity’s Advantage Bitcoin ETF (FBTC) in Canada made a significant move on January 12, reducing its management fee from 0.95% to an impressive 0.39%. This change aligns with the US-based ETF of the same name that went live on the same day, both funds now sharing the same low fee.
Lower Fees, Or Suffer
Funds that failed to lower their management fee haven’t been so fortunate.
The Grayscale Bitcoin Trust (GBTC), which levies a 1.5% fee on investors, has seen more than half of its Bitcoin holdings shrink in value since the US Exchange-Traded Fund (ETF) approvals. In spite of initially holding over 600,000 BTC, GBTC has been outpaced by BlackRock and lost its title as the largest Bitcoin ETF.
Canada’s Purpose Bitcoin ETF, which is based in Canada, has experienced a loss of approximately 20% of its assets since then. Despite being the first and largest Bitcoin spot ETF outside the US, Purpose continues to maintain its management fee at 1%.
Last week, global Bitcoin spot ETFs surpassed 1 million BTC in total assets under management.
As a crypto investor, I’ve noticed that VanEck’s European CEO, Martijn Rozemuller, has announced that our region-specific crypto Exchange-Traded Funds (ETFs) have attracted modest inflows, even with the increasing competition in the market.
As a researcher studying the crypto exchange-traded products (ETPs) market, I’ve discovered an intriguing difference between European and US markets. The potential market size for European crypto ETPs remains comparatively larger than that of spot bitcoin ETFs in the United States.
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2024-05-31 20:22