When the 11 Bitcoin ETFs debuted there was naturally a ton of excitement in the crypto space as this did help validate a lot of our feelings. As someone who also invests in the traditional markets though there was one particular thing about these ETFs that I was extremely interested in... the management fees associated with the ETFs. Management fees are a standard thing with ETFs the biggest difference boils down to a passive ETF, one that does not require a ton of trading and the fund is much more hands-off, or an active ETF where managers are much much more involved and because of this the fee tends to run much much higher. Bitcoin, because of how it fluctuates falls into the active ETF frame and so before the fees were ever announced it was safe to assume that they would be higher than people would expect.  

When the fees were announced I think it caught a lot of people off-guard. While some announced fees as low as 0.2% (Bitwise) others were as high as 1.5% with Grayscale. After seeing the response to the public and I am sure investors what we ended up seeing was these companies saying that the first six months would be 0% or it would be discounted and then after the six or twelve-month timeframe the "real" fee would kick in. Since the launch of the ETFs six have been offering 0% with one offering a half-off fee of 0.12% (regular 0.25%) while the rest have moved forward with the fee that they stated means that seven of the 11 ETFs have already lowered their fees within the first week or so. 

With the ETFs already having a cumulative value greater than other commodity ETFs except for gold the competition to keep and grow their market share is only just kicking off. Since there are pretty limited ways to make the ETFs more attractive and thus drive more people to them, cut or keep the fees as low as possible by these companies. We have seen the initial cut and I am sure we will see either more or a continuation of these cuts. One option I have seen used in the past but has not been announced yet is someone like Fidelity waving or lowering the fees for those who use the Fidelity platform. It is a benefit I have seen them offer for various Fidelity ETFs and Close End Funds before so it would make sense if the market is ripe enough right now to continue with this route.  

I have to admit thought seeing Grayscale not budge is very interesting and a little confusing to me. When launched Grayscale already had name recognition and a huge pile of BTC that it was sitting on. Grayscale had the pricing power when it came to this but with so many alternatives that investors would trust like Fidelity and iShares that pricing power rapidly depletes. Without something to keep their market share they are in jeopardy of fumbling this all away if they stick with/move forward with a fee that is multiple times higher as others and even in 7 months will continue to be multiple times higher. I can only assume there is some method to their madness as other funds are going to continue to keep their fees as low as possible to attract all of the money inflows possible. If not their dominance could quickly erode and Grayscale will not have the name that it has become accustomed to. 

Please know I am not a financial advisor and make sure you do your own research! If you enjoyed this article and would like to support me further below are a few referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_

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