European Bitcoin ETFs See Large Net Outflows Since January

Although American Bitcoin ETFs have only recently entered the market, the European variants have been tradable for some time. However, a recent report shows that European Bitcoin ETFs have not been particularly successful this year.

Data from Morningstar shows that European Bitcoin funds have suffered more than $500 million in net outflows since January, despite rising demand for Bitcoin itself during that time. The reason given for this is increased competition.

Why are European Bitcoin ETFs Losing Customers?

During that same period, ETPs for other cryptocurrencies, such as Ether, absorbed $42 million within the region, moving in the opposite direction but doing little to offset Bitcoin-related losses.

Speaking to the Financial Times, Pierre Debru – head of quantitative research and multi-asset solutions at WisdomTree – said client interest in European crypto ETPs has “increased sharply” since US Bitcoin ETFs went live in January. However, those same ETFs have also created unprecedented competition, creating “a new fee environment in Europe” that is forcing European issuers to lower their fees.

For example, BlackRock and Fidelity – the asset managers behind the first and third largest Bitcoin ETFs – now offer 0.25% annual management fees, with even bigger temporary discounts for early buyers.

In quick response, European Bitcoin ETP providers such as Invesco, WisdomTree and CoinShares have all reduced their previous rates from rates above 0.9% to below 0.4%. Similarly, Fidelity’s Advantage Bitcoin ETF (FBTC) in Canada also radically reduced its management fee from 0.95% to 0.39% on January 12.

Lower costs, or suffer

However, funds that have been unable to reduce their management fees have not been so lucky. For example, the Grayscale Bitcoin Trust (GBTC) – which charges investors a 1.5% fee – has already lost more than half of its Bitcoin since the approval of the US ETF, and has been eclipsed by BlackRock as the largest Bitcoin ETF.

Similarly, Canada’s Purpose Bitcoin ETF has lost 20% of its assets in Canada over the same period after refusing to reduce its 1% management fee. However, outside the US, Purpose is still the first and largest Bitcoin spot ETF.

For his part, VanEck’s CEO in Europe, Martijn Rozemuller, said the company’s regional crypto ETFs have managed to gain small inflows despite increased competition. In addition, it indicated the following:

“When considering the total potential market size, European crypto ETPs are still relatively larger than US spot Bitcoin ETFs.”