Key Points
- U.S. Securities and Exchange Commission (SEC) grants approval to the first-ever U.S.-listed exchange-traded funds (ETFs) tracking Bitcoin.
- Industry insiders foresee a substantial increase in capital flowing into the crypto space as a result of the newly approved Bitcoin ETFs.
- With almost a dozen approved Bitcoin ETFs, potential buyers must navigate a modest price war among issuers.
The U.S. Securities and Exchange Commission (SEC) has given the go-ahead to the first-ever U.S.-listed exchange-traded funds (ETFs) tracking Bitcoin. This watershed moment marks a significant leap for the world's largest cryptocurrency and the broader crypto industry.
After a decade-long journey, these ETFs, spearheaded by industry giants like BlackRock (NYSE: BLK), Ark Investments, Fidelity, Invesco, and VanEck, are set to debut in the market on Thursday, intensifying the battle for dominance among issuers.
Industry insiders are buzzing with anticipation, envisioning a significant influx of capital into the crypto space. Standard Chartered analysts set a lofty expectation, suggesting that the newly approved Bitcoin ETFs could attract between $50 billion and $100 billion in investments within the coming year. Meanwhile, other analysts take a longer-term perspective, forecasting a robust $55 billion inflow over the next five years.
Issuers of the approved ETFs were equally optimistic about the impact on the market. Michael Sonnenshein, CEO of Grayscale, a firm with a steadfast belief in Bitcoin's transformative potential, expressed, "We believed that Bitcoin could change the world, and we were and remain excited at the prospect of democratizing access to this asset." Cynthia Lo Bessette, Head of Digital Asset Management at Fidelity, echoed the positive sentiment, stating that the new products should provide "increased choice for investors who want to engage with" crypto.
Now that about a dozen Bitcoin spot ETFs are given the green light, how do you figure out which one to follow or invest in? Furthermore, what exactly is a Bitcoin spot ETF?
What is a Bitcoin spot ETF?
A "Spot Bitcoin ETF" is simply an ETF that holds bitcoin. These ETFs are designed to track the current price of Bitcoin closely. So what does "spot price" mean? It's the price of a security that's available right now. On the flip side, futures prices show what the price will be at a later date.
It’s also important to note that investing in a newly approved Bitcoin ETF will include fees. So, let’s take a look at each one of the approved ETFs and what their annual fee schedule is.
The 11 approved Bitcoin ETFs
Potential buyers are becoming highly price-sensitive, with a swarm of ETFs vying for attention. Issuers are entering a modest price war, exemplified by ARK Invest, initially proposing a 0.8% fee but later declaring no fee for the first six months. Furthermore, issuers like Bitwise, ARK, and Invesco slashed fees to 0% for the first six months.
Bitwise (BITB)
The Bitwise ETF will have 0.0% fees for the initial six months. After that, fees will increase to 0.20%.
Invesco Galaxy Bitcoin ETF (BTCO)
Like Bitwise, BTCO will have 0.0% for the initial six months. However, its fees will rise to 0.39% after the first six months.
ARK Invest/21Shares (ARKB)
Like Bitwise, ARKB will feature 0.0% fees for the initial six months. Subsequently, its fees will increase to 0.21%.
iShares Bitcoin Trust (IBIT)
Starting with 0.12% fees, IBIT offers a reduced rate for the first 12 months, after which fees rise to 0.25%.
VanEck Bitcoin Trust (HODL)
HODL comes with a 0.25% fee structure.
Franklin Bitcoin ETF (EZBC)
EZBC's fees stand at 0.29%.
Fidelity Wise Origin Bitcoin Trust (FBTC)
FBTC offers a fee-free period until July 31, 2024, after which fees become 0.25%.
WisdomTree Bitcoin Trust (BTCW)
BTCW begins with 0.0% fees for the initial six months, then rises to 0.3%.
Valkyrie Bitcoin Fund (BRRR)
BRRR has 0.0% fees for the first three months, followed by an increase to 0.49%.
Grayscale Bitcoin Trust (GBTC)
GBTC charges a fixed rate of 1.5%.
Hashdex Bitcoin (DEFI)
DEFI features a 0.9% fee structure.
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