The recent approval and launch of Spot Bitcoin ETFs in the US marked a significant milestone, offering investors a plethora of choices right from day one. In comparison, when physical Gold ETFs entered the market in 2004, consumers had only one option in the US - SPDR Gold Shares [GLD US]. The stark contrast in the number of options begs the question: who truly benefits from this explosion of choice?

In theory, competition, fostering innovation and consumer choice, should favor the consumer. The fee war in Gold ETFs took almost a decade to escalate after the initial launch but led to Gold mini shares ETF, a host of non-physical Gold ETF choices, and lower fees. Conversely, with 10 Spot Bitcoin ETFs debuting simultaneously, the fee battle started even before approval, with issuers cutting fees up to the approval deadline. 

Analyzing the initial weeks of flows reveals interesting trends. While there were net outflows from the Bitcoin ETF with the highest fees, surprisingly, the largest inflows did not necessarily gravitate toward the ETFs with the lowest fees. This prompts a cautious reminder to investors: despite appearances, differences between seemingly similar products can be nuanced. 

Buyer Beware. For investors venturing into the ETF space, it's crucial to conduct thorough research beyond fee considerations. The following factors warrant careful evaluation:

  • Underlying Strategy:
    • Ascertain whether the strategy is active or passive and review the underlying benchmark or index methodology.
    • Despite passively tracking the same Bitcoin, subtle differences in pricing methodology and exchange inclusion can have a material impact on fund pricing and performance.
  • Liquidity and Spread:
    • Assess the ease of buying and selling, which varies based on fund size, market maker support, and derivative trading.
    • Less liquid ETFs may lead to wider bid-ask spreads, impacting entry and exit prices, as well as premiums or discounts to the fund's Net Asset Value (NAV).
  • Issuer Expertise and Track Record:
    • Evaluate the manager behind the ETF and consider their expertise, experience, and understanding of the underlying nascent asset as it evolves and the wider ecosystem and players.
    • The manager's trading and industry network can significantly influence their ability to control trading costs and deviations from the underlying benchmark or index.

As investors navigate the expanding landscape of digital asset ETF options, it's clear that more choices do not necessarily guarantee better outcomes. Investor discernment and Issuer expertise become critical for understanding the opportunities presented by Spot Bitcoin and Gold ETFs alike.


Joy Yang is the Head of Product Management and Marketing at MarketVector. She is responsible for managing MarketVector products and services to accelerate innovation in financial index design and adoption. Joy brings more than 25 years of investment experience to MarketVector, having led teams delivering index and quantitative-active investment solutions at Arabesque Asset Management, Dimensional Fund Advisors, Vanguard, Aberdeen Standard Investments, AXA Rosenberg, and Blackrock. She has an MBA from the University of Chicago Booth School of Business and a Bachelor of Science in Electrical Engineering from Cooper Union’s Albert Nerken School of Engineering.


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