Crypto Quill

The Invesco Galaxy Bitcoin ETF (BTCO), a joint venture between Invesco and Galaxy Asset Management, has announced a reduction in its expense ratio from 0.39% to 0.25%. This move is aimed at attracting more investors and gaining an edge over other spot bitcoin ETFs in the market.

BTCO Waives Fee for Six Months or Until $5 Billion AUM

The fee cut is effective immediately and will apply to all existing and new investors of BTCO. In addition, Invesco has waived the entire fee of BTCO for the first six months or until the fund reaches $5 billion in assets under management (AUM), whichever comes first. This means that the total expense ratio of BTCO will be zero during this period, making it one of the most cost-efficient ways to access the performance of bitcoin.

BTCO is the first spot bitcoin ETF to launch in partnership with Galaxy Asset Management, a leading digital asset manager. The fund tracks the Lukka Prime Bitcoin Reference Rate, which is a daily benchmark price for bitcoin based on the most liquid and reliable exchanges. BTCO provides investors with exposure to the spot price of bitcoin, without the need to buy, store, or manage the cryptocurrency directly.

BTCO Faces Stiff Competition from Other Spot Bitcoin ETFs

The fee reduction of BTCO comes amid a fierce competition in the spot bitcoin ETF market, which has seen a surge of interest and inflows since the U.S. Securities and Exchange Commission (SEC) approved the first such products earlier this month. Several industry giants, such as BlackRock, Fidelity, VanEck, and Valkyrie, have launched their own spot bitcoin ETFs, offering similar or lower fees than BTCO.

According to data from ETF.com, the spot bitcoin ETFs have collectively attracted more than $5.7 billion in AUM as of January 29, 2024. The largest and most popular fund is the BlackRock Bitcoin ETF (BITO), which has amassed more than $2.8 billion in AUM and charges a fee of 0.25%. The second-largest fund is the Fidelity Bitcoin ETF (FBTC), which has gathered more than $1.1 billion in AUM and charges a fee of 0.25%. The third-largest fund is the VanEck Bitcoin ETF (XBTF), which has accumulated more than $800 million in AUM and charges a fee of 0.25%.

In contrast, BTCO has lagged behind its rivals, with only about $283 million in AUM as of January 29, 2024. The fund has also seen lower trading volumes and liquidity than its competitors. The fee cut of BTCO may help it gain more traction and market share, as well as differentiate itself from other similar products.

BTCO Aims to Provide Efficient and Secure Access to Bitcoin

Despite the competitive landscape, BTCO claims to offer several advantages to investors who want to gain exposure to bitcoin. The fund leverages the expertise and experience of Galaxy Asset Management, which has been a pioneer and leader in the digital asset space. The fund also utilizes the Lukka Prime Bitcoin Reference Rate, which is designed to provide a reliable and transparent price for bitcoin, based on data from multiple sources and methodologies.

Moreover, BTCO aims to provide a secure and efficient way to access bitcoin, by using a network of qualified custodians and sub-custodians to hold and safeguard the fund’s bitcoin holdings. The fund also employs various risk management and compliance measures, such as daily audits, independent valuations, and insurance coverage, to protect the interests of investors.

BTCO is listed on the NYSE Arca and trades under the ticker symbol BTCO. The fund has a net asset value (NAV) of $40.23 and a market price of $40.25 as of January 29, 2024. The fund has a total of 7,032,500 shares outstanding and a daily trading volume of 1,015,300 shares.