After several failed attempts, crypto investors celebrate the long-awaited spot Bitcoin Exchange-Traded Funds (ETF) approved by the US Securities and Exchange Commission (SEC).
On Wednesday, January 10, the SEC approved 11 Bitcoin ETFs simultaneously to provide a “level playing field” for the issuers.
Only One Will Win Bitcoin ETF War?
Many ETF issuers offered low fees to attract more investors to choose them over their competitors. Some of them, like Fidelity and Bitwise, even offer to waive their management fees for the first six months.
However, with many options, the question of who will be the winner among the ETF issuers prevails. CEO of Galaxy Digital, Michael Novogratz, joined CNBC’s ‘Squawk Box’ on January 11 to discuss this matter.
Since not all ETFs are created the same way, as Novogratz explains, the execution of an ETF, the liquidity, and hidden fees all play a significant factor in its success when several “sales forces are trying to pull in money.”
The CEO believes that “tracking error” sets apart his Invesco Galaxy Bitcoin ETF (BTCO), now trading on the Cboe exchange, from other ETFs. He stated:
We have an ETF in Canada with CI-Group. We started in second. We were in second place, and now we’re the largest ETF. And I looked at last year’s tracking error. Cause all you really care about as an investor is ‘does it attract bitcoin?’ We had less than 1% tracking error. Our largest competitor had 11%.
Novogratz is confident in the success of his ETF, “We’ve done it before. In Germany, Canada, Brazil. We know how to run a cash ETF,” he added. He also believes that there won’t be a singular winner among the ETFs, stating:
So I think in the long run you are going to have two or three that actually win. I don’t think it will be one winner, I think it will be a couple of winners.
Bitwise AM Believes That Competition Will Be Healthy For Investors
Katherine Dowling, Bitwise AM’s General Counsel and Chief Compliance Officer, joined Bloomberg News on January 10 to discuss the SEC’s approval of the spot BTC ETFs. In the interview, she declares that ETF issuers were ensuring that “ they’re not going to be the one that has the Boeing door plot” by testing and ensuring everything works.
Like Novogratz, Dowling remains confident in Bitwise’s success in attracting investor interest despite the estimates being all “over the place.” “We base that in historical fact, followed by several other ETF issuances that have occurred in the past,” she stated.
When presented with the possibility of many of the 11 approved ETFs not existing in a year, Dowling affirms that to keep existing, the issuers must set their product apart and constantly talk with advisors.
Ultimately, she believes there’s no need for only one winner, and that competition within the field is suitable for investors. However, it does not erase the uncertainty from the different BTC ETF future:
We can be explaining how we’re different and then we will see what happens with the entire field. But you’re right, there are a number of us out there, but that’s actually really good for investors. You don’t need to have only one. You get a better price point and you get better differentiation, and then it’s up to the investor to choose and to look and to see the market and decide what’s right for them and what’s going to be the best choice for them to add some Bitcoin exposure to their portfolio.
At press time, BTC trades at $45,778.54 on the hourly chart.
BTCUSD is trading at $45,778.54 on the hourly chart. Source: BTCUSD on TradingView.com
Chart from Tradingview