Summary
Bitcoin spot exchange-traded funds (ETFs) may face a shrinkage in the number of issuers by the end of the year due to the high costs of running such funds, according to Valkyrie Funds’ Chief Investment Officer Steven McClurg. He predicts that only “about seven or eight” of the ten current issuers will survive, as the race to lower fees may hurt profitability for struggling issuers. Despite fierce competition from rivals like BlackRock and Fidelity, McClurg is satisfied with Valkyrie’s performance, noting that the firm has outperformed larger issuers. However, he believes that the challenges to profitability may lead to some issuers canceling their Bitcoin spot ETFs.
Key Points
1. Spot Bitcoin ETFs may face a shrinking field by the end of the year due to the high costs of running such ETFs and the intense competition in the market. Valkyrie Funds’ Chief Investment Officer predicts that only “about seven or eight” out of the current ten issuers will remain standing.
2. Despite the challenges, the influx of funds into Bitcoin spot ETFs has been strong since their approval by the Securities and Exchange Commission. On the first day of trading alone, there was $4.5 billion in trading, and there have been significant inflows since then.
3. Valkyrie Funds, one of the issuers in this space, has expressed satisfaction with its performance, outperforming larger issuers. However, the competition is fierce, with Wall Street giants like BlackRock and Fidelity already crossing the $3 billion mark in assets under management. The race to attract investors has led to fee cuts, which may affect the profitability of ETFs and contribute to the predicted shrinkage of the field.