European Bitcoin ETFs Face Decline
European Bitcoin exchange-traded funds (ETFs) have experienced significant financial setbacks, with net outflows amounting to $500 million since January, as reported by the Financial Times using Morningstar data. In contrast, European “crypto” ETFs for Ethereum and other altcoins have seen minimal net inflows of only $42 million during the same period, failing to offset the substantial losses of Bitcoin-focused ETFs.
EUROPE’S SPOT BTC ETPs ARE STRUGGLING…
— Coach K Crypto (@Coachkcrypto) May 30, 2024
Rising Bitcoin Prices and Investor Interest
Despite Bitcoin’s price increasing by 54% this year, indicating strong global demand, European Bitcoin investment products have not benefited proportionally. Pierre Debru, head of quantitative research and multi-asset solutions at WisdomTree, noted a marked increase in client inquiries about these products since January.
The launch of long-awaited Bitcoin spot ETFs in the United States in January has also significantly impacted European counterparts. These U.S. funds, which began operations on January 11, have attracted $13.6 billion in net inflows, largely dominated by BlackRock and Fidelity’s Bitcoin trusts. These U.S. ETFs offer extremely low annual management fees of just 0.25%, which has created a competitive fee environment, forcing European providers to reduce costs to remain appealing.
Funds that have not reduced fees have seen a continuous decline. The Grayscale Bitcoin Trust (GBTC), another U.S. fund that transitioned to a Bitcoin ETF in January while maintaining a 1.5% fee, has lost over half of its initial Bitcoin holdings, relinquishing its position as the largest Bitcoin ETF to BlackRock.
Similarly, Canada’s Purpose Bitcoin ETF (BTCC), once the largest globally before January, now holds 27,052 BTC, down from 35,706 BTC at the start of the year, and charges a 1% management fee.
European Market Position
Martijn Rozemuller, CEO of VanEck’s European business, mentioned that VanEck’s local Bitcoin and Ethereum ETNs saw minor net inflows since January. Despite the challenges, Rozemuller stated that European crypto ETPs remain relatively larger compared to the U.S. spot Bitcoin ETFs when considering the total potential market size.