European Bitcoin ETFs Face Decline

European Bitcoin exchange-traded funds (ETFs) have experienced significant financial setbacks, with net outflows amounting to $500 million since January

European exchange-traded funds (ETFs) tracking Bitcoin have seen net outflows of $500 million year-to-date, Financial Times reported on Monday, citing Morningstar data. In contrast, net inflows into European “crypto” ETFs for Ethereum and other altcoins stood at $42 million during the same period.

Rising Bitcoin Prices and Investor Interest

Despite Bitcoin’s price rising 54% this year, indicating strong global demand, European Bitcoin investment products have not seen a proportional uptake.

“We’ve had a lot of clients asking about these products since January, but the net flows show a different picture,” said Pierre Debru, head of quantitative research and multi-asset solutions at WisdomTree.

The launch of long-awaited Bitcoin spot ETFs in the U.S. in January also had a major impact on their European counterparts.

These U.S. funds, which began trading on January 11, attracted a total of $13.6 billion in net inflows, with BlackRock and Fidelity’s Bitcoin trusts accounting for the bulk of the inflows.

The U.S. ETFs come with very low annual management fees of 0.25%, which created a competitive fee environment, putting pressure on European providers to reduce their costs to remain attractive.

Funds that didn’t lower their fees saw a continuous decline. Another U.S. fund, the Grayscale Bitcoin Trust (GBTC), which transitioned to a Bitcoin ETF in January but maintained its 1.5% fee, lost more than half of its initial Bitcoin holdings, giving up its title as the largest Bitcoin ETF to BlackRock.

Similarly, Canada’s Purpose Bitcoin ETF (BTCC), which was once the largest globally before January, now holds 27,052 BTC, down from 35,706 BTC at the beginning of the year, with a management fee of 1%.

European Market Position

Martijn Rozemuller, CEO of VanEck’s European business, said that VanEck’s local Bitcoin and Ethereum ETNs saw minor net inflows since January.

“Despite the challenges, if we look at the total potential market size, European crypto ETPs are still an order of magnitude larger than the U.S. spot Bitcoin ETFs,” added Rozemuller.