The post Survival of the Fittest: Predicting the Future of Bitcoin Spot ETFs appeared first on Coinpedia Fintech News
As the cryptocurrency market witnesses the advent of Bitcoin spot (ETFs), Valkyrie Funds’ chief investment officer, Steven McClurg, predicts a scenario where the current array of ETF issuers may not stay put by the end of the year. McClurg attributes this prediction to the major challenges posed by operational costs and competition within the industry.
In his talk with Decrypt, McClurg emphasized that amidst the ten existing ETF issuers, only around seven or eight are likely to endure. The high operational expenses associated with running a Bitcoin spot ETF along with the aggressive fee reductions initiated by competitors, are significant hurdles for struggling issuers.
According to McClurg, failure to hold at least $100 million in assets under management can help overcome the competition in the ETF
Since the Securities and Exchange Commission approved Bitcoin spot ETFs on January 10, the sector has witnessed robust inflows. According to the sources, the sector saw a promising start and the first day of trading saw a huge $4.5 billion in transactions.
Performance of Valkyrie during the competition
Valkyrie has competitors like BlackRock and Fidelity, yet the firm has shown commendable performance. BlackRock’s iShares Bitcoin ETF and Fidelity’s Wise Origin Bitcoin Fund surpassed the $3 billion mark in assets under management within a month. Valkyrie acquired approximately $123.7 million in assets as of February 8. Though the volume might be less compared to its peers, the company is set to break records.
Challenges along the path of future
The intensifying competition has made a series of fee cuts to attract investors. Valkyrie aligning its sponsor fee with industry norms at 0.25%
McClurg also warns that the current price of ETF issuers will face daunting profitability challenges. These challenges are especially with operational costs and sustainability.
Conclusion:
Issuers are advised to start accumulating assets in millions to sustain the spot Bitcoin ETFs. Bitcoin spot ETFs have shown to be complex in their operational costs along with high competition among other issuers. As McClurg has forecasted, industry participants will face definite challenges for market dominance. So the issuers should overcome these challenges and head for success in the ETF race.