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Bitcoin ETF Fees at Zero? VanEck Slashes Costs, Undercuts BlackRock

Last Updated March 12, 2024 4:08 PM
Eddie Mitchell
Last Updated March 12, 2024 4:08 PM
By Eddie Mitchell
Verified by Peter Henn
Key Takeaways
  • VanEck to charge zero Bitcoin ETF management fees from March 12, 2024.
  • Since announcing the fee slash, VanEck saw record inflows into its spot Bitcoin ETF.
  • Grayscale to introduce lower fee “Bitcoin Mini Trust” as competitors lower fees.

The spot Bitcoin exchange-traded fund (ETF) market is heating up as major competitors begin to undercut one another in a bid for dominance.

As spot Bitcoin ETFs continue to draw investors in, the VanEck Bitcoin Trust (HODL) has announced it will be cutting its fees to zero for a set period of time. Is this a sign of competition or underperformance?

VanEck Cuts Costs

On March 11, 2024, investing behemoth VanEck announced that it was removing its management fee for its spot Bitcoin ETF, HODL.

This isn’t indefinite. As stated, the fee will be 0% from March 12, 2024, to “March 31, 2025*”. The main caveat is that this fee cut only applies to the “first $1.5 billion of the Trust’s assets”. Should this figure be exceeded before the provisional date, the previous fee of 0.2% will be reintroduced.

This undercuts another recent fee discount from BlackRock’s Ishares Bitcoin Trust (IBIT). The fund lowered its management fees from 0.25% to 0.11%  for a 12-month period beginning on January 11, 2024.

Furthermore, VanEck’s original fee of 0.2%  was already beating out offers from the rest of the competition. Only Franklin Templeton Digital Holdings Trust (EZBC) beat VanEck, by virtue of a fee of 0.19%, before BlackRock’s discount.

Competition or Lagging Behind?

In its post, VanEck claims the fee cut is down to their belief in Bitcoin (BTC), but the numbers seem to suggest that it’s not just a competitive edge that VanEck is shooting for, but, instead, a bigger share of the market.

Until now, VanEck’s HODL fund has managed to draw some $319 million  in total net assets as of March 11, 2024.

As for the response however, it seems as though VanEck’s 0% fees on HODL have attracted fresh capital, with the fund seeing record inflows to the tune of around $119 million yesterday (March 11 2024), putting it in third place for total inflows.

With that said, VanEck HODL fund is still behind its nearest competitor. Invesco Galaxy Bitcoin ETF (BTCO) currently holds a total market value of $400.9 million.

There is still a huge gap between VanEck and the likes of Bitwise Bitcoin ETF Trust (BITB) and Grayscale Bitcoin Trust (GBTC). Those two funds hold between $1.2 billion to over $28 billion  in assets under management.

Timing the Market

With the price of BTC still holding above $70,000, it’s the perfect time to onboard even more investors. Grayscale now plans to roll out a low-fee version of their GBTC ETF, which currently holds a fee of 1.5%. Reportedly, the proposed Grayscale Bitcoin Mini Trust  “spin-off” of the much larger GBTC fund.

Competitors are seeking to lower fees and offset their outflows. Therefore, the next year could see the likes of VanEck grow substantially as investors seek more affordable places to shore up their assets.

Should VanEck reach or exceed the $1.5 billion cap on its 0% offering over the next 12 months, it could very soon be climbing into the top ranks of spot Bitcoin ETF providers.

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