VanEck Releases the New Bitcoin ETF on the Block — Here's What We Know

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Oct. 25 2021, Published 1:01 p.m. ET

Last week, ProShares released a Bitcoin ETF (exchange-traded fund) that tracks futures contracts for the cryptocurrency. Competitors are already coming in hot, with asset manager VanEck set to release its own Bitcoin futures fund this week.

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What's the price for the VanEck Bitcoin ETF, and how does it compare to the first fund of its kind, ProShares?

VanEck Bitcoin Strategy ETF set to list this week

As of Monday, Oct. 25, the VanEck Bitcoin Strategy ETF is ready to list on a major exchange this week. The event comes just a week after ProShares became the first to get a Bitcoin ETF past the Securities & Exchange Commission (SEC).

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The SEC has been hesitant to allow Bitcoin funds to pass through the regulatory gates, but ETFs that don't directly invest in the coin are beginning to gain approval.

VanEck said in its SEC filing it will launch "as soon as practicable" following Saturday's effective date.

VanEck brings another Bitcoin futures contract fund

Like ProShares, VanEck tracks Bitcoin futures contracts. This means the fund doesn't directly invest in cryptocurrencies, but tracks the performance of the asset through futures contracts. By offering the fund in ETF form, the asset becomes accessible for everyday investors who may not be privy to futures contract proceedings.

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VanEck prices Bitcoin ETF fees lower than competitors.

As of Oct. 25, Bitcoin is valued at $63,565.50. Ether is at $4,199.74. Meanwhile, the overall cryptocurrency market capitalization has hit a new high at $2.63 trillion.

As the cryptocurrency market booms, VanEck is taking a bold strategy. The firm is pricing the fund's expense ratio at 0.65 percent, which amounts to $6.50 in fund payouts for every $1,000 invested.

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This expense ratio is a lot lower than that of the ProShares Bitcoin Strategy ETF (BITO), which sets the price at 95 basis points or 0.95 percent. That amounts to $9.50 for every $1,000 invested. It's also lower than the Valkyrie Investments’ Bitcoin Fund (BTF), which hopes to start trading soon at a 0.95 percent expense ratio.

With lower fees, VanEck's Bitcoin ETF could be at an advantage against competitors. Now that the SEC has begun approving funds that track Bitcoin futures contracts, investors will be able to see how the niche sector performs. While the goal of the funds is to track the general value of Bitcoin, the true fluctuations will be slightly different due to the funds' reliance on futures contracts as a regulatory workaround.

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Will the VanEck Bitcoin Strategy ETF soar or flop?

Currently, ProShares' BITO is trading 2.65 percent lower than its launch price on Oct. 20. Bitcoin is a notoriously volatile asset and tends to spike and dip more often and at greater strengths than the overall stock market. With increased competition, performance could bolster in the Bitcoin futures fund arena.

As for VanEck, a lower expense ratio could do it good. While the firm has yet to release a specific share price to start, the important thing is that it will let investors keep more of their returns.

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