Only Six filings out of over a dozen spot bitcoin exchange-traded funds (ETF) applications have revealed their fee structures. As a result, experts believe that each fund will hold a share in the same asset and that fees will have a substantial impact on Bitcoin post-ETF approval.
Potential Impact Of Bitcoin ETF Fees
The Bitcoin exchange-traded fund market has seen 13 competitors, but only six have revealed their management fees. According to insiders, prospective investors are now concentrating on this fee because approvals might start pouring in as early as next week.
Since all these ETFs will track the value of BTC, details like the expense ratio are what really set such services apart from one another. According to James Seyffart, an ETF analyst at Bloomberg Intelligence, extremely low costs may not be necessary, but they should be decent enough to force competitors to improve on their offers or become non-existent.
Seyffart added that the most important thing is not to pick the one with the lowest price tag but to find one that balances affordability with competitiveness.
The ETF Fee Structure
The expense ratio includes a variety of expenses, such as custodial services, marketing efforts, and even employee pay. Morningstar’s research revealed that the average charge for open-end mutual funds and exchange-traded funds in 2022 was 0.37%.
This number is significantly lower than the 0.91% level observed twenty years ago. In the ongoing struggle for a portion of the ETF market, Invesco and Galaxy granted fee waivers for the first six months and an initial $5 billion in assets, per ETF analyst Eric Balchunas.
Following the completion of this introductory phase, a fee of 0.59% will be implemented. However, Fidelity has established an industry standard by placing its fund as one with the lowest fee structure on the market (0.39%).
On the other hand, Ark, 21Shares, and Valkyrie propose a fee that is 0.80% more than the current rate. Like Seyffart and Balchunas, Nate Geraci, the former President of The ETF Store, a leading financial advisory firm, also stressed the importance of the expense ratio.
Awaiting BlackRock’s Move
Meanwhile, the global asset management behemoth BlackRock has been tight-lipped about its pricing structure. As a major player in the finance industry, its popularity is nearly guaranteed due to its great reputation, solid track record, and diverse portfolio of profitable funds.
Regarding the projected fees, Seyffart predicts it to be around 0.39%, while Geraci forecasts it will be between 0.40% and 0.80%. In addition, Seyffart highlights Fidelity’s minor advantage of having a complete structure compared to others in the field.
Accordingly, they can offer the most competitive pricing. “Fidelity’s unique advantage lies in its vertical integration, boasting an in-house custodian unlike its counterparts,” Seyffart added.
Could BTC Trade At $50K In Q2 2024?
Meanwhile, Dan Gambardello, a popular crypto expert, predicts BTC’s possible upward breakout from a symmetrical triangle en route toward the $50,000 price threshold if a spot BTC ETF is approved. Gambardello explained that symmetrical triangles form when an asset’s price moves within converging trendlines, signaling less volatility and a buyer-seller standoff.
The analyst dug deeper into technical indicators, pointing to BTC’s Bollinger Bands on the daily chart, which confirmed low market volatility. Since the start of the year, the gap between the upper and lower bands has shrunk. In terms of BTC dominance, Gambardello predicted that the introduction of a spot ETF would launch Bitcoin into a new bull market phase, including a climb to $50K.
In the event that the US Securities and Exchange Commission (SEC) denies approval, Gambardello predicts a drop in BTC’s price of up to $37K. This rejection could also trigger a sell-off by short-term BTC investors. Nevertheless, this scenario highlights Bitcoin’s price’s susceptibility to regulatory actions.
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