Losses of $500 Million Incurred by European Bitcoin ETFs Since January

European Bitcoin ETFs Experience $500 Million in Losses Since January


Andrew Throuvalas
Last updated:
May 30, 2024 21:09 EDT
|
2 min read


Despite the increasing demand for Bitcoin globally, European Bitcoin exchange-traded funds (ETFs) have suffered significant losses, while their counterparts in the United States have seen success.
Losses in European Bitcoin ETFs
According to data from Morningstar, European Bitcoin exchange-traded products (ETPs) have experienced net outflows of $500 million year-to-date, as reported by the Financial Times.
In contrast, “crypto” ETPs for altcoins like Ether have only seen net inflows of $42 million during the same period, which does little to make up for the losses of the more established Bitcoin ETPs.
Interestingly, Bitcoin’s price has increased by 54% during this time, indicating a growing demand for Bitcoin worldwide. Pierre Debru, the head of quantitative research and multi-asset solutions at WisdomTree, noted that client inquiries about European Bitcoin investment products have significantly increased since January.
The Approval of Bitcoin Spot ETFs in the United States
The approval of Bitcoin spot ETFs in the United States in January has had a significant impact on the European market. These ETFs have made it easier for institutional investors in the US to access spot Bitcoin price exposure. Since their launch on January 11, these US funds have attracted a total of $13.6 billion in net inflows, led by BlackRock and Fidelity’s Bitcoin trusts.
These US funds have a competitive advantage due to their ultra-low annual management fees of just 0.25%, which is much lower than the fees charged by European competitors. As a result, Debru stated that the US ETFs have created a new fee environment in Europe, forcing European providers to reduce costs to remain appealing.
The Fee War Among Bitcoin ETFs
In contrast, those European providers who have refused to lower their fees have experienced continuous losses. A notable example is the Grayscale Bitcoin Trust (GBTC), which converted into a Bitcoin ETF in January while charging a 1.5% fee. Despite initially holding over 630,000 BTC, the fund has now lost more than half of its Bitcoin holdings, and BlackRock has overtaken it as the world’s largest Bitcoin ETF.
Similarly, Canada’s Purpose Bitcoin ETF (BTCC), which was the first and largest in the world before January, now holds only 27,052 BTC compared to 35,706 BTC on January 5. The fund charges a 1% management fee.
According to Martijn Rozemuller, the CEO of VanEck’s European business, the company’s local Bitcoin and Ethereum exchange-traded notes (ETNs) have seen small net inflows since January. VanEck was behind one of the ten Bitcoin funds launched in the United States in January.
“Considering the total potential market size, European crypto ETPs are still relatively larger than the spot Bitcoin ETFs in the US,” Rozemuller told the Financial Times.
Follow Us on Google News