Bitcoin ETF Battle: VanEck’s Zero-Fee HODL Gambit

VanEck is taking drastic action to attract investors to its spot bitcoin exchange-traded fund (ETF) called HODL. The asset manager announced it will temporarily cut the management fee to zero percent until March 31, 2025. This fee waiver represents an extremely aggressive move in the increasingly competitive Bitcoin ETF marketplace.

The fee cut will remain in effect unless HODL’s assets under management reach $1.5 billion before the Mar 2025 deadline. VanEck noted in a post on social media platform X that VanEck is implementing this drastic fee reduction because HODL has gotten off to a slower start than some rival bitcoin ETFs that hit the market around the same time.

Currently, HODL has just over $305 million in assets under management. That pales compared to the immense $13 billion locked in BlackRock’s iShares Bitcoin Trust (IBIT), the largest of the newly launched spot bitcoin ETFs. Grayscale’s Bitcoin Trust (GBTC) is even bigger, with nearly $30 billion, though it converted from a closed-end fund.

Other competitors, such as Fidelity, Invesco, WisdomTree, and Valkyrie, have also amassed over $1 billion in their respective Bitcoin ETF products. The only new issuer with fewer assets than HODL is Franklin Templeton’s Bitcoin ETF, which has around $200 million in assets.

VanEck Slashes Fees In Bitcoin ETF Race

VanEck claims the zero-fee decision is motivated by its strong belief in Bitcoin’s potential as a transformative asset class. A spokesperson said the firm wants to “democratize” access to BTC through an ultra-low-cost fund. However, attracting more cash inflows from cost-conscious investors was likely the bigger factor behind the dramatic fee cut.

Before the waiver, HODL charged a 0.2% expense ratio, which was already one of the lowest fees in the bitcoin ETF category. Most rivals charge 0.25%, though Franklin Templeton undercuts everyone at 0.19%. After eliminating fees for over two years, VanEck aims to increase assets and market share following rapid early outpacing.

The fee war highlights the intense competition as big asset managers jockey for position in the hot new bitcoin ETF space. Fees could fall even lower if HODL’s bold move successfully reels in new assets. With billions in earnings potentially up for grabs, the battle for BTC ETF dominance is only heating up.

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