Fidelity's Bitcoin ETF Surpasses Grayscale's Outflows Amid Fee War in Global Market
Summary:
Fidelity's Bitcoin spot exchange-traded fund (ETF) recorded daily inflows of $208 million on January 29, topping Grayscale Bitcoin Trust's outflows for the first time since its inception. The news comes amid a crowded market for Bitcoin spot ETFs, where issuers reportedly cut fees to attract investors. CoinShares suggests traders may be pivoting from Europe to US-based products in response to this fee war.
The Bitcoin (BTC) spot exchange-traded fund (ETF) by Fidelity experienced unprecedented daily inflows of $208 million on January 29, surpassing the outflows of Grayscale Bitcoin Trust for the first time since its inception, says preliminary information from Farside Investors. Fidelity's FBTC encountered an inflow surge on January 29, while GBTC experienced a $192 million outflow, marking its smallest outflow aside from its initial launch, as indicated by BitMEX Research data. This outflow reflects a decline of almost 25% from $255 million on January 26 and a notable 70% decrease from $641 million at its peak on January 22. Aside from the $95 million outflow on January 11, when it transitioned to a spot Bitcoin (BTC) ETF, Grayscale's fund recorded its second-lowest outflow ever.
Experts are closely monitoring for any signs of slowed GBTC outflows due to investors seizing the opportunity to liquidate once-underwater positions. JPMorgan analysts stated on January 25 that Bitcoin has experienced a pressurized decrease due to GBTC's outflows but predicted these headwinds are likely passing. Data from January 29 reveals that the nine new U.S. spot Bitcoin ETFs collectively hit a trading volume of $994.1 million, nearly doubling that of GBTC with $570 million as per Bloomberg ETF analyst, James Seyffart.
The Fidelity Wise Origin Bitcoin Fund (FBTC) along with BlackRock’s iShares Bitcoin Trust (IBIT) took the lion's share after GBTC by reaping daily trading volumes of $315.4 million and $460.9 million, respectively – this comprised 78% of the combined trading volume by the nine new ETFs. Amid the intensely competitive space for spot Bitcoin ETFs, fund issuers are even rumored to be slashing fees to draw investor interest globally.
Taking a segway, the Invesco Galaxy Bitcoin ETF (BTCO), jointly run by Invesco and Galaxy Asset Management, announced on January 29 to reduce its expense ratio from 0.39% to 0.25%, aligning it to the same level as Valkyrie, BlackRock, VanEck, and Fidelity. The first six months of BTCO will have zero fees or till it secures $5 billion in assets, post which the revised, lower fee will apply.
The competition to reduce fees may have repercussions on Europe's ETFs. There's speculation that traders may pivot from Europe-based products to their U.S. counterparts as suggested by CoinShares research. Invesco cut fees on its Europe-based Bitcoin ETF from 0.99% to 0.39% on January 23, and WisdomTree followed suit by reducing fees from 0.95% to 0.35%. CoinShares also slashed its flagship Bitcoin ETF fees from 0.98% to 0.35% on January 25.
Published At
1/30/2024 6:08:18 AM
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