Bitcoin ETF Fee War Breaks Out As Competitors Prepare To Slug It Out For Market Share

Updated: 09 January 2024

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Spot Bitcoin ETF applicants revealed planned fees for their products as a war for market share breaks out even before the new investment vehicles are approved for sale.

Multiple fund managers that have applied to launch Bitcoin ETFs (exchange-traded funds) revealed their fees in forms submitted to the Securities and Exchange Commission (SEC).

And the players have come out slugging with a decision by the regulator expected on at least one application by tomorrow.

Bitwise is waiving fees for the first six months or until it reaches $1 billion in assets with a subsequent charge of 0.24%.

Ark/21Shares will also waive fees for the first six months or until the fund hits $1 billion in assets, after which it will charge 0.25%.

I spoke too soon re: low-water mark!

Ark and 21Shares are going 0.25% and *NO FEE* for the first six months or until $1 billion in assets

these are very, very low numbers https://t.co/zjCRNPJpts pic.twitter.com/NrifnrAAWe

— Katie Greifeld (@kgreifeld) January 8, 2024

BlackRock has also disclosed a 0.2% fee for the first year or until it hits $5 billion in assets, before increasing its charge to 0.30%.

According to Bloomberg ETF analyst Eric Balchunas, any ETF applicant whose fees are higher than BlackRock’s will have a challenge competing in the market.

Damn, the fee for BlackRock’s Bitcoin ETF will be 0.30% as per their just filed S-1. This is much cheaper than I predicted. Life just got a LOT tougher for everyone else. The ETF Terrordome is no joke. pic.twitter.com/RZrfO8x61s

— Eric Balchunas (@EricBalchunas) January 8, 2024

“BlackRock at 30bps is a potential instant destroyer of anyone much higher,” Balchunas added.

VanEck has announced a fixed fee of 0.25%, Fidelity’s is set at 0.39% while Invesco/Galaxy is at 0.59%. The Invesco/Galaxy ETF has a zero-fee structure during the first six months or until the product has $5 billion in assets.

Grayscale has the highest fee of 1.5%. According to analysts, the digital asset manager has a head start with Grayscale Bitcoin Trust (GBTC) holding about $27 billion of BTC and volumes approaching $500M daily. However, the high fee might still be a deterrent.

$GBTC traded close to half a billion today, which is more than 99% of the 3000 current ETFs, and reminder that they are bringing a (volume) gun to a knife fight if they launch with everyone else. That said, the 1.5% fee will act as a repellent. Another fascinating sub-plot. pic.twitter.com/506EG3PR7t

— Eric Balchunas (@EricBalchunas) January 8, 2024

Battle for Market Share Amid Looming Spot BTC ETF Approvals

According to a VanEck report, flows into spot Bitcoin ETFs will reach $1 billion within a few days after approval, rising to $2.4 billion during the first quarter of 2024.

All eyes are now on the SEC to determine whether the first spot Bitcoin ETF will launch in the US this week.