Bitcoin Fund Fees Are Falling Under the ‘Crypto Winter’

In the midst of the ongoing crypto meltdown, fund managers are reducing the cost of exchange-traded products in order to get investors back into the asset class.

In an effort to tempt investors as they try to weather the bear market, Swiss cryptocurrency expert 21Shares has unveiled a new vehicle that monitors the price of bitcoin that undercuts rivals — and even its own flagship products.

The debut came during a brutal sell-off for all things crypto. The price of bitcoin fell 70% from its November highs to $19,430. Moreover, the market capitalization of the top 500 crypto tokens fell to less than $1 trillion from a high of $3.2 trillion.

The new listed instrument from 21Shares has a total expense ratio of only 0.21 percent. This is lower than the previous phase of cost-cutting, when companies such as Fidelity and Global X offered bitcoin-linked products for 0.4-0.7%. It is also a long way from the 1.49 percent cost charged by 21Shares’ current $164 million flagship Bitcoin ETP (ABTC).

There is a catch to the Zurich-based group’s Bitcoin Core ETP (CBTC).

Unlike some competitors, it will be able to lend out part of its bitcoin inventory and will very certainly do so to help it turn a profit despite the low fees. Its plans include risk-adjusted crypto ETPs, which will provide some downside protection in exchange for giving up some potential gains, “so the investor can have more confidence investing at this point.”

The products, which should cover bitcoin, ether, and possibly some broader crypto indexes, may be akin to the buffered, or specified outcome, equities ETFs that are popular in the US.

Despite the crypto crisis, there is still a lack of excitement for linked ETPs. So far this year, the 126 worldwide cryptos ETPs tracked by TrackInsight have witnessed a total net inflow of $282 million.

21Shares’ assets have declined from $3 billion in November 2021 to $1 billion. However, the aggregate share count for its ETPs is at an all-time high, indicating net inflows.

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