Amid strong demand and inflows continuing in spot Bitcoin ETFs, issuers have escalated the fee war. On Monday, January 29, Investco and Galaxy Digital announced the reduction in their spot Bitcoin ETF fees by 35% from 39 bps to now at 25 bps.
Fee War Escalates Among Spot Bitcoin ETF Issuers
As per the latest statement, the expense ratio for the Invesco Galaxy Bitcoin ETF (BTCO) will be reduced to 0.25%, down from its previous rate of 0.39%. The fund will waive its fees for the initial six months or until it accumulates $5 billion in assets, whichever comes first.
We have @InvescoUS & @galaxyhq cutting the long term fee on their #Bitcoin ETF from 39 bps to 25 bps.
(Yes they have the fee waiver to 0% for first 6 months or $5 billion in assets). Story from @emily_graffeo & @kgreifeld pic.twitter.com/Erk2NU9kVF
— James Seyffart (@JSeyff) January 29, 2024
This move adds to the existing trend of issuers lowering costs in the emerging industry, even preceding the approval of spot Bitcoin ETFs by US regulators earlier this month. Notable industry players like BlackRock Inc. and Fidelity, leveraging their extensive distribution networks, have surged ahead.
Together, they have amassed around $4 billion in combined investor inflows, constituting approximately 70% of total spot Bitcoin ETF inflows. In comparison, BTCO currently holds the fifth position with an approximate haul of $283 million. These massive inflows in Bitcoin ETF continue while the GBTC registers a drop in net outflows.
Despite the fee reduction on Monday, BTCO doesn’t claim the title of the cheapest spot Bitcoin ETF available. Franklin Templeton’s fund boasts a post-waiver expense ratio of 0.19%, making it the most economical among spot Bitcoin ETFs. On Monday, BTCO’s shares experienced a 2.8% increase, mirroring the surge in Bitcoin price.
Bitcoin Price Jumps, $170,000 In Sight
The recent developments have served as a catalyst to the Bitcoin price with some analysts predicting a surge to $50,000 before the Bitcoin halving. Some of the market veterans are very bullish for Bitcoin post the halving in April 2024.
Anthony Scaramucci, the founder of SkyBridge Capital, anticipates that the next Bitcoin (BTC) halving will propel the cryptocurrency’s price to $170,000 per coin. This projection is grounded in Bitcoin’s historical pattern of reaching new all-time highs after each halving, which occurs approximately every four years and reduces the rate at which new BTC is generated by half. Speaking on the Scott Melker podcast last week, Scaramucci said:
“Go back and look at Bitcoin halving cycles. The day that Bitcoin halves, multiply it by four [and] 18 months later and it’s been uncanny that that’s been the price of Bitcoin.”
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