In a recent development, Invesco and Galaxy Asset Management have joined the ongoing battle over fees in the spot Bitcoin ETF space.
The two companies announced that the Invesco Galaxy Bitcoin ETF (BTCO) will now have an expense ratio of 0.25%, reduced from its previous 0.39%. The fund will waive its fees for the initial six months or until it reaches $5 billion in assets.
Bitcoin ETF Fee Battle Intensifies
This adjustment marks the latest move in the competitive landscape of the emerging industry, where various issuers have been slashing fees even before the approval of spot Bitcoin ETFs by US regulators earlier this month.
“Invesco Ltd. (NYSE: IVZ), a leading global provider of exchange-traded funds (ETFs), in partnership with Galaxy Asset Management,1 one of the world’s largest digital asset and blockchain investment managers, today announced a reduction in Invesco Galaxy Bitcoin ETF’s (BTCO) Sponsor Fee by 14 basis points, lowering the total expense ratio from 0.39% to 0.25%.”
Major players like BlackRock Inc. and Fidelity, leveraging their significant distribution capabilities, have surged ahead, attracting around $4 billion in combined investor inflows, which constitute roughly 70% of the total inflows into spot Bitcoin ETFs. Meanwhile, BTCO ranks fifth currently, having garnered approximately $283 million.
Despite the fee reduction announced on Monday, BTCO is not the most cost-effective option among spot Bitcoin ETFs. In fact, Franklin Templeton’s offering boasts a post-waiver expense ratio of 0.19%, making it the cheapest among such ETFs.
According to data shared by Bloomberg Intelligence ETF analyst James Seyffart, the reduced fee will align Invesco and Galaxy’s spot Bitcoin ETF with the majority of its competitors. The closest fee to this new rate is WisdomTree’s, which stands at 0.30%. Seyffart’s data indicates that Grayscale’s ETF is currently the most expensive among the recent products that entered the market earlier this month.
The competition over fees in the United States may have impacted European ETFs as well, with CoinShares research suggesting that traders are potentially shifting away from Europe-based products.
Last week, Invesco reduced fees on its Europe-based Bitcoin ETF from 0.99% to 0.39%. This move was mirrored by WisdomTree, which also lowered fees from 0.95% to 0.35%.
CoinShares followed suit on January 25, decreasing fees on its primary Bitcoin ETF from 0.98% to 0.35%.