VanEck has filed an application with the US Securities and Exchange Commission to launch an ETF that would undercut its rivals.
Bitcoin briefly dipped below $60,000 on Sunday — but the world’s biggest cryptocurrency rally toward $63,000 at the start of a new working week.
Bullish momentum had somewhat stalled after all-time highs of $67,000 were achieved last Wednesday.
A second exchange-traded fund based on Bitcoin futures was launched in the US on Friday, but the mood was dampened by a price correction.
Some analysts are now predicting that a “brutal” price war could break out — with VanEck filing an application with the US Securities and Exchange Commission to launch an ETF that would undercut its rivals.
The two products to hit the market first — the ProShares Bitcoin Strategy ETF and Valkyrie Investments’ Bitcoin Fund — charge a management fee of 95 basis points.
However, VanEck says it plans to charge just 65 basis points for investors who trade through its Bitcoin Strategy ETF.
This could be a big deciding factor for investors who vote with their wallets. While choosing the ETFs with the higher fees would result in expenses of $9.50 for every $1,000 invested, VanEck’s offer would cut this to $6.50.
ETF Store president Nathan Geraci told the Financial Times:
“At the end of the day, Bitcoin futures ETFs are commodity products. Costs matter and I expect a brutal fee war to play out in this category. [This] is the opening salvo in what will be a ruthless, ongoing fee competition.”
Fellow analysts agreed — warning that ProShares will lose its first-mover advantage if significant fee differences are available.
All of this comes as crypto exchanges increasingly prepare for similar battles, with a number of smaller trading platforms attempting to woo users by slashing the fees that are charged for every trade.
Such a price war could prove damaging for market leaders, especially because transaction fees account for most of their revenues. Coinbase has been seeking to diversify its business as a result — and recently unveiled plans to launch a new marketplace for non-fungible tokens.
Although ETFs are considered as a good thing when it comes to boosting Bitcoin’s credibility as a viable investment option, there are concerns that these exchange-traded funds may struggle to act as a reliable barometer for spot prices.
As a result, the performance of these funds over the coming weeks and months will be closely watched by analysts — many of whom believe gaining exposure to Bitcoin directly remains the best play when it comes to crypto.
What also remains to be seen is whether a physically backed Bitcoin ETF will be given the green light for launch. The SEC has repeatedly delayed a number of applications — and as of now, a ruling isn’t expected until later in November and December.
Despite all of these reservations, the demand is there. ProShares accumulated $1 billion in assets under management within days of its launch. About 3.1 million shares changed hands when Valkyrie launched on Friday, but this pales in comparison to the 24 million shares traded in the ProShares ETF on Tuesday.