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VanEck Reduces Fees to Zero for Bitcoin Spot ETF Amidst All-Time High Inflows

12 Mar 2024

Mitchell Nixon

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Asset manager VanEck has announced a reduction of all sponsor fees to zero for the initial $1.5 billion in its Bitcoin Trust ETF until March 31, 2025. The sponsor fee, initially set at 0.20% of net assets under management for funds surpassing $1.5 billion, is now eliminated as a promotion of confidence in Bitcoin. 

The VanEck Bitcoin Trust ETF, approved by the U.S. Securities and Exchange Commission (SEC) on January 4, currently holds $297.86 million in assets with 4,299 Bitcoin. Since its inception two months ago, the ETF tracking Bitcoin’s performance has yielded an 87.7% return.

While the SEC was assessing spot Bitcoin ETF applications, a price war erupted among ETF managers over management expenses. The Grayscale Bitcoin Trust initially had a 2% annual management fee, but with the advent of competitors, the industry average has plummeted to below 0.30%. 

On the same day, Eric Balchunas, a senior ETF analyst at Bloomberg, highlighted in his research that the ten listed spot Bitcoin ETFs in the U.S. have reached a record-high total of $55 billion in assets under management and $110 billion in total traded volume.

“If these were the numbers at the end of year I’d call them a success. To do it in eight weeks is simply absurd,” Balchunas stated, adding: 

“That said, I wouldn’t get crazy with growth predictions like ‘they could challenge SPX ETFs’. Here’s [a] look [at] them vs other categories. Tech ETFs (which is just one sector of US mkt) is massive. Plus [it is] hard to pass core categories when they [are] used as satellite positions.”

Bitcoin ETFs have exceeded the size of S&P 500 Industrial ETFs, yet they still lag behind the assets under management of S&P 500 Low Volatility sector ETFs. Moreover, they are considerably distant from the trillions of dollars managed in gold ETFs. As of the current publication, Bitcoin is trading at an all-time high price of $71,870.