JAKARTA - Institutional investors are increasingly interested in investing in Bitcoin (BTC) through Exchange Trade Fund (ETF) spot, namely ETF which owns Bitcoin directly as a basic asset.
This prompted Bitcoin spot ETF publishers in the United States to compete tightly by offering lower costs. This cost war also has an impact on the global Bitcoin market, which has the potential to experience a significant price increase.
VanEck Cuts Its Bitcoin Spot ETF Fees
One of the recently lowering spot Bitcoin ETF publishers is VanEck, a New York-based investment management company. According to an additional filing dated February 15, VanEck Bitcoin Trust (HODL) will lower its operating costs from 0.25 percent to 0.20 percent on February 21. HODL, which has about USD 187.74 million (approximately IDR 2.93 trillion) in total assets under its management, is expected to attract more investors at a more competitive cost.
"This decrease in costs reflects our commitment to value and improve access for investors, and helps ensure investors continue to benefit from one of the most competitive offerings in the ETF bitcoin space," a VanEck spokesperson said.
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Widespread Fee War To Europe
The cost war among spot Bitcoin ETF publishers has not only occurred in the United States, but also in Europe, where the spot's Bitcoin ETF has been available since 2020. Several European spot Bitcoin ETF issuers have lowered their operational costs to stay competitive with newly signed US publishers.
For example, Fidelity Physical Bitcoin ETP (FBTC), which was launched in December 2020, has reduced its operating costs from 0.75 percent to 0.35 percent in early February 2024. FBTC, which has about $1.1 billion (approximately IDR 17.2 trillion) in total assets under its management, is one of the largest Bitcoin ETF spot in Europe.
In addition, Invesco Galaxy Bitcoin ETF (BTCO) and WisdomTree Bitcoin Fund (BTCW), which each have around 1.2 billion US dollars (around Rp 18.8 trillion) and 1.4 billion US dollars (around Rp 21.9 trillion) in total assets under management, have also reduced their operating costs to 0.39 percent and 0.35 percent, respectively, in January 20243. Similarly, CoinShares, one of the oldest Bitcoin spot ETF issuers in Europe, has lowered its operating costs to 0.35 percent.
The Impact Of The Fee War On The Bitcoin Market
The cost war among spot Bitcoin ETF issuers has a positive impact on the Bitcoin market, as it shows high demand from institutional investors for these crypto assets. Bitcoin spot ETF offers an easy, secure, and regular way to invest in Bitcoin, without the need to own or store Bitcoin directly. Bitcoin spot ETF also increases Bitcoin's market liquidity and transparency, which can strengthen price discovery and stability processes.
With the Bitcoin spot ETF, institutional investors can increase their allocation to Bitcoin, which could drive up Bitcoin price in the future. In addition, Bitcoin's daily demand from Bitcoin spot ETF issuers has recently exceeded the daily supply of miners, meaning that demand will continue to exceed supply. This could accelerate the increase in Bitcoin prices, especially ahead of the upcoming half-halving in May 2024, which will reduce the number of new Bitcoins created every day.
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