When the spot exchange-traded funds (ETFs) were set for release in early 2024, the main metric many looked at to differentiate the many options was the expense ratio or the amount of fees charged by the ETF sponsor. For some, the fees were relatively low, but others, such as Grayscale Bitcoin Trust (GBTC), were high.
This difference became apparent when GBTC began experiencing huge outflows after its ETF was converted from a futures-linked ETF to a spot ETF. Many who had invested in GBTC when it was futures-linked were selling their shares and flocking to the newer and cheaper ETFs. Investors look closely at the fees presented by ETF sponsors and consider them when making investment decisions.
Notably, VanEck waived fees on its spot Bitcoin ETF, which trades under the ticker symbol HODL. The investment management firm announced that it will waive the fee on the HODL ETF until the fund reaches $1.5 billion in assets under management or on March 31, 2025, whichever comes first. HODL's current assets under management are around $300 million, so $1.5 billion is a big step up.
Before the announcement, HODL already charged one of the lowest fees among the ETFs. Its expense ratio was 0.2%.
VanEck's director of digital assets products said the fee waiver reflects the company's dedication to providing competitive investment opportunities and may encourage more investors to explore the potential of Bitcoin.
VanEck CEO Jan Van Eck told CNBC that the firm thinks "we are just in the middle innings of a bull market" and that in terms of the Bitcoin cycle, "we are still right in the middle of it."
Bitcoin has performed exceptionally well in 2024. The token is up over 60% YTD and more than 150% in the past 6 months. It has reached new highs, breaking the $73,000 level in early March.
VanEck is one of many ETFs that have helped propel Bitcoin to new highs. These ETFs have helped bring in more investors, both from the retail side and the institutional level. It will be interesting to see how things develop relating to the drop in fees. How quickly will HODL reach $1.5 billion in assets under management? Will it have any impact on total fund flows? If so, how will that impact the price of Bitcoin?
With lots of questions and possible scenarios that could arise from VanEck cutting fees, it will be important to keep an eye on the price of Bitcoin, HODL, and the other spot ETFs.