There are still lingering questions. As with any ETF, it’s unclear when major distribution platforms will choose to offer the spot Bitcoin products. Yet to crypto bulls, the victory in many ways lies in the funds’ very existence.
“What an ETF represents for Bitcoin adoption extends beyond the immediate inflows into these products, potentially reshaping the market in entirely unprecedented ways,” Coinbase Global Inc. said in a report. “Nevertheless, we think this will take time to unfold.”
Fee War
While fee wars are a common feature of the $8 trillion ETF arena, the battle to lower costs broke out before the spot Bitcoin ETFs launched. BlackRock, Ark Investment Management and Invesco were among the issuers who dropped their costs in the days leading up to Wednesday’s approval.
The fact that all the products launched on the same day — removing the potential first-mover advantage — and hold the same underlying asset added extra fuel to the race-to-the-bottom on fees. Several firms turned to fee waivers in a bid to stand out, offering their ETFs for free for the first six or twelve months.
“It’s like two years worth of fee wars have been condensed into a couple days,” said Bloomberg Intelligence’s Balchunas.
The Bitwise Bitcoin ETF (ticker BITB) is the lowest-priced offering at an eventual fee of just 20 basis points, with an initial sweetener of zero fees for the first six months or until the fund reaches a certain asset threshold. Fees on nearly all of the ETFs that began trading Thursday range between 20 basis points to 49 basis points. The Grayscale Bitcoin Trust (GBTC) is the outlier with a fee of 1.5%.
Galaxy Digital’s Steve Kurz, whose firm launched the Invesco Galaxy Bitcoin ETF in partnership with Invesco, says that fees aren’t the end-all for investors and advisers evaluating the funds. BTCO will charge 0.39% after an initial six-month fee waiver.
“What’s the point of talking about a few basis points of fees when you are talking about how you manage the liquidity of a very volatile underlying asset?” Steve Kurz, global head of asset management at Galaxy Digital, said on Bloomberg Television.
What’s Next
One of the next stages of Wall Street adoption will be when options tied to these ETFs are approved. The derivative instruments are favored by investment professionals as a way to make wagers on future gains or hedge against losses. Cboe Global Markets Inc. currently expects the SEC will approve options trading later in 2024.
Meantime, hours after the products began trading, the ETF machine cranked out a new filing: The Grayscale Bitcoin Trust Covered Call ETF, which will seek income and exposure to GBTC.
“Historic feels like the right description,” said Todd Sohn, an ETF strategist at Strategas. “Now the real work begins to see who has staying power.”
This article was provided by Bloomberg News.