Bitcoin ETFs are one of the hottest topics in the crypto space right now, as investors eagerly await the approval of the first spot bitcoin ETF in the U.S. A spot bitcoin ETF is an exchange-traded fund that directly holds bitcoin, allowing investors to gain exposure to the price of the cryptocurrency without having to buy or store it themselves.
However, not all bitcoin ETFs are created equal. Different ETFs have different fee structures, investment strategies, and risk profiles. In this blog post, we will compare the fees and strategies of five major bitcoin ETF players that have recently revealed their latest S-1 filings with the U.S. Securities and Exchange Commission (SEC).
Valkyrie Bitcoin Strategy ETF (BTF)
Valkyrie is one of the first ETF issuers to file for a spot bitcoin ETF in the U.S. The Valkyrie Bitcoin Strategy ETF (BTF) aims to track the performance of the MVIS CryptoCompare Bitcoin VWAP Close Index, which measures the value of bitcoin based on a volume-weighted average price (VWAP) of the closing prices across five major exchanges.
The BTF has an annual fee of 0.8%, which includes the management fee, custody fee, and other expenses. The BTF will use Coinbase Custody Trust Company as its custodian, and will also invest in cash and cash equivalents to meet its liquidity and operational needs.
Invesco Bitcoin Strategy ETF (BITC)
Invesco is another ETF giant that has filed for a spot bitcoin ETF in the U.S. The Invesco Bitcoin Strategy ETF (BITC) seeks to provide exposure to the price of bitcoin by investing in physically settled bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME).
The BITC has an annual fee of 0.59%, which includes the management fee, futures commission, and other expenses. The BITC will also offer a fee waiver for the first six months of operation, making it effectively free for early investors. The BITC will use CME Clearing as its custodian, and will also hold cash and U.S. Treasury securities as collateral.
BlackRock Bitcoin Strategy ETF (BTCR)
BlackRock is the world's largest asset manager, with over $9 trillion in assets under management. The BlackRock Bitcoin Strategy ETF (BTCR) is the latest addition to its ETF lineup, and also the one with the lowest fee among the spot bitcoin ETF applicants. The BTCR seeks to track the performance of the Bloomberg Galaxy Bitcoin Index, which reflects the price of bitcoin based on the most liquid exchanges.
The BTCR has an annual fee of 0.3%, which includes the management fee, custody fee, and other expenses. The BTCR will use Fidelity Digital Assets Services as its custodian, and will also invest in cash and cash equivalents to meet its liquidity and operational needs.
ARK 21Shares Bitcoin ETF (ARKB)
ARK is a leading innovator in the ETF space, known for its actively managed funds that focus on disruptive technologies. The ARK 21Shares Bitcoin ETF (ARKB) is a collaboration between ARK and 21Shares, a Swiss-based crypto ETF provider. The ARKB seeks to provide exposure to the price of bitcoin by investing in the 21Shares Bitcoin ETP, which is a physically backed exchange-traded product that holds bitcoin in cold storage.
The ARKB has an annual fee of 0.8%, which includes the management fee, ETP fee, custody fee, and other expenses. The ARKB will use Coinbase Custody Trust Company as its custodian, and will also invest in cash and cash equivalents to meet its liquidity and operational needs.
VanEck Bitcoin Strategy ETF (XBTF)
VanEck is a veteran ETF issuer that has been pursuing a spot bitcoin ETF since 2017. The VanEck Bitcoin Strategy ETF (XBTF) seeks to track the performance of the MVIS CryptoCompare Bitcoin Benchmark Rate, which measures the value of bitcoin based on a volume-weighted average price (VWAP) of the most reputable exchanges.
The XBTF has an annual fee of 0.25%, which is the lowest among the spot bitcoin ETF applicants, excluding BlackRock. The XBTF will use State Street Bank and Trust Company as its custodian, and will also invest in cash and cash equivalents to meet its liquidity and operational needs.
Lets conclude
Bitcoin ETFs are a convenient and regulated way for investors to gain exposure to the price of bitcoin without the hassle of buying and storing the cryptocurrency directly. However, investors should be aware of the different fees and strategies of each ETF, as they may affect the returns and risks of their investment. As of January 2024, the SEC has not approved any spot bitcoin ETFs in the U.S., but many experts believe that the approval is imminent. Until then, investors can explore other options, such as bitcoin futures ETFs, bitcoin trusts, or crypto exchanges, to access the bitcoin market..
Source: Conversation with Bing, 8/1/2024
(1) BlackRock sets lower fee for spot bitcoin ETF compared to peers. https://www.msn.com/en-us/money/markets/blackrock-sets-lower-fee-for-spot-bitcoin-etf-compared-to-peers/ar-AA1mCHSJ.
(2) Bitcoin ETF hopefuls eye this week for long-awaited SEC greenlight. https://www.moneycontrol.com/news/world/bitcoin-etf-hopefuls-eye-this-week-for-long-awaited-sec-greenlight-12015241.html.
(3) Bitcoin ETF Anticipation Contributes To $151 Mln Inflows In Digital Assets. https://coingape.com/bitcoin-etf-anticipation-contributes-to-151-mln-inflows-digital-assets/.
(4) Best Bitcoin ETFs Of January 2024 – Forbes Advisor. https://www.forbes.com/advisor/investing/cryptocurrency/best-bitcoin-etfs/.
(5) What Is a Bitcoin ETF? - CoinDesk. https://www.coindesk.com/learn/what-is-a-bitcoin-etf/.
(6) What Is a Bitcoin ETF? | Binance Academy. https://academy.binance.com/en/articles/bitcoin-etfs-explained.
(7) Getty Images. https://www.gettyimages.com/detail/photo/crytpocurrency-royalty-free-image/954471176.
