Bitcoin Prices Surge as Spot ETF Issuers Cut Fees
Bitcoin Prices Surge as Spot ETF Issuers Cut Fees
In a matter of days, the SEC could grant bitcoin ETFs permission to start trading
- Bitcoin prices surge after pending exchange-traded funds lower fees.
- SEC faces a Wednesday deadline for approving products.
- The technical outlook remains bullish with a chance of pullback.
Bitcoin prices surge as spot bitcoin ETF managers lower fees ahead of anticipated SEC approvals
Bitcoin futures (/BTCF4) surged over 7% today in a mixed market after investment managers updated their filings with the Securities and Exchange Commission (SEC) to disclose the fees they would charge for their spot bitcoin exchange-traded funds (ETFs). Investors took it as another sign the ETFs are moving along in their review process.
Grayscale (GBTC), Blackrock (BLK) and other investment managers updated their filings today. The Wednesday deadline is now upon us, and it could be a matter of days until the ETFs get the green light to start trading.
The updated filings show Grayscale plans to charge a 1.5% annualized fee, which would be 50 basis points lower than it charges now as a trust. BlackRock would charge a 0.3% fee after charging 0.2% on the first $5 billion of assets amid first-year trading. The lowest is Bitwise at 0.24%. These fees compare to the ETF industry average of about 0.53% per year.
The fact that numerous investment managers are competing to launch the products has fueled speculation that these ETFs will add a permanent tailwind to bitcoin prices and help cement cryptocurrencies as a bona fide investment next to the likes of other asset classes such as gold and equities. Some estimate that over $2 billion can flow into these ETFs on the first day of trading.
Why is a spot bitcoin ETF bullish for the underlying?
The fees associated with these ETFs will likely be a deciding factor for retail investors, who will pick the products with the lowest fees. However, short-term traders will trade whichever provides the most liquidity—something that likely will be decided within days of launch.
As investors and traders buy these ETFs, the managers for the funds are required to buy the underlying asset—Bitcoin in this case—so that its net asset value (NAV) tracks the price of the ETF. More indirectly, ETFs generally improve market sentiment by increasing the availability to retail investors.
Bitcoin technical outlook
Bitcoin prices are quickly approaching the highest levels traded since March 2022. A break above 48,475 would clear the way to levels not seen since November 2021, when Bitcoin hit an all-time high just shy of 70,000.
The technical structure is bullish, with a series of higher highs and lower lows over the past few months. Meanwhile, the Relative Strength Index (RSI) shows a bearish divergence (lower lows in the oscillator vs. higher highs in the prices. That could indicate waning momentum. However, there is likely appetite to buy any pullbacks.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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