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Which Bitcoin ETF Is Best? Why VanEck’s XBTF Could Dethrone BTF and BITO.


Today, yet another Bitcoin (CCC:BTC-USD) exchange-traded fund (ETF) has hit the market. The Valkyrie Bitcoin Strategy ETF (NASDAQ:BTF) began trading today after receiving its blessing from the Securities and Exchange Commission (SEC) earlier this week. Like its peer, the ProShares Bitcoin Strategy ETF (NYSE:BITO), this ETF tracks Bitcoin futures, rather than the spot price of Bitcoin itself.

Piles of gold Bitcoin tokens stacked together.
Source: kitti Suwanekkasit / Shutterstock.com

Unfortunately, investors in BTF have seen declines today of more than 5% at the time of writing. This downside move appears to be outpacing the decline in the price of Bitcoin. Currently, Bitcoin prices are down roughly 3.7% at the time of writing. The BITO ETF is down approximately the same amount.

What’s intriguing about BTF’s rather poor start is the fund’s underperformance relative to its peer. Indeed, some of this underperformance could be due to the rather oversubscribed interest in its peer. This week, it’s been reported that BITO brought in more than $1 billion in assets in two days. This represents the fastest capital inflows into any ETF, ever.

That said, it appears competition is set to heat up in this space. Right now, investors appear to be focusing on the next Bitcoin ETF to hit the market next week.

Let’s dive into why the upcoming VanEck Bitcoin Strategy ETF could provide headwinds for both of these funds.

Why Investors May Be Waiting For the Next Bitcoin ETF

As reported by Bloomberg this week, it appears the Bitcoin ETF pricing war is getting started. The incoming VanEck Bitcoin Strategy ETF, expected to be listed under the ticker “XBTF,” is set to have the lowest pricing of its peers.

This ETF has announced a management fee of 0.65%. While high relative to other index funds, this fee is markedly lower than its peers. For example, the ProShares Bitcoin Strategy ETF carries a fee of 0.95%. The Valkyrie Bitcoin Strategy ETF holds the same fee.

Whether these two incumbent ETFs adjust their fees lower to meet this new VanEck option at 0.65% remains to be seen. Indeed, there appears to be plenty of capital looking to flow into these ETFs. Perhaps these funds don’t have to.

However, as the battle for ETF market share heats up, it’s expected this fee war could accelerate a price war that’s been ongoing for decades. Indeed, lower fees are better for investors. However, whether investors will wait for fees to be lowered before dividing in remains to be seen.

In any case, this week will be an interesting one from a Bitcoin ETF standpoint.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2021/10/which-bitcoin-etf-is-best-why-vanecks-xbtf-could-dethrone-btf-and-bito/.

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