According to CryptoPotato, European Bitcoin exchange-traded products (ETPs) are experiencing significant losses this year due to increased competition from United States-based counterparts. Morningstar data reveals that European Bitcoin funds have seen over $500 million in net outflows since January, despite the growing demand for Bitcoin during the same period. In contrast, ETPs for other cryptocurrencies like Ether have absorbed $42 million within the region, indicating a different trend but insufficient to offset Bitcoin-related losses.
Pierre Debru, head of quantitative research and multi-asset solutions at WisdomTree, told the Financial Times that client interest in European crypto ETPs has 'greatly increased' since US Bitcoin ETFs were launched in January. However, this has also led to unprecedented competition, resulting in a new fee environment in Europe that has compelled European issuers to reduce their fees. Asset managers such as BlackRock and Fidelity, who manage the 1st and 3rd largest Bitcoin ETFs, now offer 0.25% annual management fees, with additional temporary discounts for early investors. In response, European Bitcoin ETP providers like Invesco, WisdomTree, and CoinShares have all lowered their previous fees from rates above 0.9% to below 0.4%.
Funds that failed to reduce their management fee have not fared well. For instance, the Grayscale Bitcoin Trust (GBTC), which charges a 1.5% fee to investors, has already lost over half of its Bitcoin since the US ETF approvals. It has been surpassed by BlackRock as the largest Bitcoin ETF despite starting with a lead of over 600,000 BTC. Similarly, Canada’s Purpose Bitcoin ETF has lost 20% of its assets during that time after refusing to lower its 1% management fee. Despite this, Purpose remains the first and largest Bitcoin spot ETF outside the US. Last week, global Bitcoin spot ETFs surpassed 1 million BTC in total assets under management.
Martijn Rozemuller, VanEck’s CEO in Europe, stated that the company’s regional crypto ETFs have managed to secure small inflows, despite the rise in competition. 'Total potential market size considered, European crypto ETPs are still relatively larger than the spot bitcoin ETFs in the US,' he said.
