Global Bitcoin Funds Drain Assets Amid US ETF Boom

The surge in demand for spot-Bitcoin ETFs in the US is significantly impacting longstanding investment products that played a pioneering role in introducing cryptocurrencies to the world of funds.

According to data from CoinShares International Ltd., investors have withdrawn a collective $738 million from Bitcoin-related vehicles on exchanges in Germany, Canada, and Sweden in 2024. With Bitcoin reaching new record highs, most departing investors are likely shifting from one Bitcoin product to another, seeking lower management fees, as suggested by Stéphane Ouellette, CEO of FRNT Financial Inc., according to a Bloomberg report.

Ouellette noted, “American investors, who had previously managed to buy Bitcoin-ETPs on other exchanges, are highly likely candidates to have repatriated their investment dollars to US ETFs.”

Purpose Investments Inc., headquartered in Toronto, introduced its Bitcoin ETF on the Toronto Stock Exchange in early 2021, imposing a 1% management fee—four times higher than BlackRock Inc.'s comparable fund, approved in January. CoinShares data indicates that while the BlackRock Bitcoin Trust has attracted over $12 billion in inflows since the beginning of the year, Purpose Investments has experienced $369 million in outflows.

Similarly, offerings from XBT Provider AB, a Swedish issuer of exchange-traded products owned by CoinShares, have witnessed net outflows totaling $182 million since the start of the year.

James Butterfill, CoinShares' Head of Research, recognized that some of the outflow might result from US investors repatriating their investments to US ETF, but he also suggested it could be attributed to long-term investors seizing profits amid Bitcoin's surge.

Butterfill remarked, “All these markets have had ETPs for many years now, unlike the US, so there is probably an element of profit taking at these levels.”

The rate of outflows seems to be decelerating. CoinShares data reveals that approximately 50% of year-to-date outflows from German, Canadian, and Swedish crypto products occurred in January, with recent month-to-date outflows representing only about 26% of the total divestment for the year.