Why ETF fees matter when you choose your Bitcoin ETF

And why are GBTC fees so high

In the first batch of approval, the SEC gave the green light to eleven Bitcoin ETFs. That's a lot of options to track the same thing. 

Those eleven products might differ slightly on reputation, details of the tracking method, liquidity and such. But one of the most obvious difference for investors is the difference in fees. 

Right after the launch many of those funds are running discounted (or waved fees) to attract inflows. But that's not going to last. And after this grace period fees will range from 0.20% all the way to 1.50%!

Why such a big difference? And how is that going to matter for the long run?

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Why ETF fees matter when you choose your Bitcoin ETF

The takeaway

In a very uniform market fees are the number one way for the Bitcoin ETFs to attract funds. Because as long as a given ETF does a good enough job at tracking Bitcoin, the number one thing that makes a difference on the performance of your investment are the fees.

Fees taken away from Bitcoin's real performance every year compound over time. After 10 years, if you invested in GBTC (fund with the highest fees) your net returns will be 10% worst than if you had placed your money in the fund with the lowest fees.

If you are investing for decades, e.g. in a retirement account, that matters. That also matters because you can't expect Bitcoin to grow 100% annualized when it will be a multi-trillion dollar asset. So performance optimization is a must.

Right now GBTC can maintain high fees because they already benefit from the advantage of size. But over the long run this won't be sustainable.

The Bitcoin ETF fees in context