European Bitcoin ETFs have bled over $500 million in net outflows since January, struggling against low-fee competitors from the US, according to Morningstar data.
Why Are European Bitcoin ETFs Losing Ground?
Despite increasing client interest, European ETFs are losing customers to US-based ETFs, which launched in January with ultra-low fees.
Fee Wars: US giants like BlackRock and Fidelity now offer annual management fees as low as 0.25%, forcing European providers like Invesco, WisdomTree, and CoinShares to slash their fees from above 0.9% to below 0.4%.
Market Impact: Funds that didn't adjust fees, like the Grayscale Bitcoin Trust with its 1.5% fee, have suffered significant losses. Grayscale lost over half its Bitcoin holdings and was overtaken by BlackRock as the largest Bitcoin ETF. Canada's Purpose Bitcoin ETF, with a 1% fee, saw a 20% asset drop.
Competing for Investors
While other cryptocurrency ETPs in Europe, like those for Ether, have seen inflows of $42 million, they haven't offset Bitcoin-related losses. Global Bitcoin spot ETFs recently surpassed 1 million BTC in assets under management.
Despite these challenges, some European ETFs have managed small inflows. VanEck’s European CEO, Martijn Rozemuller, notes that European crypto ETPs still hold a relatively larger market share compared to US spot Bitcoin ETFs.
Conclusion
European Bitcoin ETFs are under pressure to compete with US ETFs' lower fees, resulting in significant outflows. The landscape remains competitive, with fee reductions being crucial for retaining investors.