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European bitcoin ETFs have lost $500 million since January

This drop in value reflects the volatility in the cryptocurrency market and the challenges investors face in the face of Bitcoin’s price volatility.

Date: 2024-06-03 Author: Marek Stiller
European bitcoin ETFs have lost $500 million since January

The success of bitcoin ETFs in the United States has come at the expense of their global competitors, despite growing demand for bitcoin over the past few months.

As reported by the Financial Times, Morningstar data shows that Bitcoin ETPs in Europe have seen net outflows of $500 million since January of this year.

Meanwhile, “crypto” ETPs for Ether and other altcoins have attracted only $42 million in net inflows during that time, doing little to offset the ETP losses of their institutionally dominant older siblings.

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However, the price of Bitcoin has risen 54% in that time, suggesting that demand for Bitcoin has only increased worldwide. In fact, according to Pierre Debru – head of quantitative research and multi-asset solutions at WisdomTree – customer inquiries for European Bitcoin investment products have “increased significantly.”

Since its launch on January 11, U.S. funds combined have absorbed net inflows of $13.6 billion, led by BlackRock and Fidelity’s Bitcoin mutual funds.

These two funds, in particular, charge very low annual management fees of just 0.25% – significantly less than their pre-existing foreign competitors. As a result, Debru said, U.S. ETFs have “created a new fee environment in Europe” in which continental providers must cut costs to remain attractive.

Necessary war on bitcoin ETF fees

In turn, those who refuse to lower fees are experiencing continued capital outflows. The biggest example is the Grayscale Bitcoin Trust (GBTC), another U.S. fund that converted to a bitcoin ETF in January, charging a 1.5% fee.

Despite initially holding more than 630,000 BTC, the fund has now lost more than half of its holdings in Bitcoins, and BlackRock has already stolen the title of the world’s largest Bitcoin ETF.

Similarly, Canada’s Purpose Bitcoin ETF (BTCC) – the first and largest in the world before January – now holds just 27,052 BTC , compared to 35,706 BTC as of January 5. The fund charges a 1% management fee.

According to VanEck’s CEO for Europe, Martijn Rozemuller, the company’s local Bitcoin and Ethereum ETNs have seen a small net inflow since January. VanEck was behind one of ten Bitcoin funds launched in the United States in January.

“Considering the total potential market size, European cryptocurrency ETPs are still relatively larger than bitcoin ETFs in the US,” – Rozemuller told the FT.

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Marek Stiller
Marek Stiller
Founder of the "Cryptocurrency for Beginners" channel on YouTube. He collaborates with Łukasz to form the Arena Trading group, while at the same time being passionate about blockchain technology. His knowledge and experience in the cryptocurrency industry help beginner investors better understand this dynamic market.
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