BlackRock-Fidelity bitcoin ETF asset race ‘a heavyweight fight that can go either way’

While the daily net flows entering BlackRock’s spot bitcoin ETF have repeatedly beat competing offerings, Fidelity Investments’ BTC fund remains on its tail in a battle analysts expect to persist. 

The Fidelity Wise Origin Bitcoin Fund (FBTC) edged BlackRock’s iShares Bitcoin Trust (IBIT) in net flows on Monday — $208 million to $198 million — according to Bloomberg Intelligence data. 

Overall, the two financial giants are neck and neck atop the flows leaderboard since launching alongside eight other spot bitcoin ETFs on Jan. 11. 

IBIT and the FBTC have so far seen flows amounting to about $2.4 billion and $2.1 billion, respectively.

Read more: Bitcoin ETF Tracker

The companies benefit from their large and well-established distribution networks, analysts told Blockworks — particularly when it comes to the financial adviser channel. 

BlackRock manages about $9 trillion in assets, including about $2.6 trillion in its US ETFs. Though not as large of an asset manager, Fidelity had $11.5 trillion assets under administration, as of Sept. 30.

Sumit Roy, a senior analyst at ETF.com, said while he expects both firms’ funds to grow substantially over time, it’s “impossible” to predict which will be larger. 

“Fidelity’s advantage is that it has a massive base of retail and adviser clients using its brokerage services, so it can easily push the ETF to them,” he told Blockworks. “On the other hand, BlackRock is the largest asset manager in the world, with plenty of marketing and distribution muscle of its own.”

Roy added: “It really is a heavyweight fight that can go either way.”

A Fidelity spokesperson declined to comment on how it could seek to boost assets in FBTC. A BlackRock representative did not immediately return a request for comment.

CoinShares product head Townsend Lansing noted that exchange-traded products are access tools for traditional investors, many of whom place a lot of value in brand names.

“That doesn’t mean that more crypto native [firms] won’t have opportunities to show value or earn flows as investors demand and reward more bespoke and informed insight into digital assets,” Lansing added.

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A fund by Ark Invest and 21Shares, as well as one by crypto-focused firm Bitwise, sit in third and fourth place with about $600 million of net inflows each.  

While Grayscale Investments’ Bitcoin Trust ETF (GBTC) started with a big asset lead of roughly $28 billion, its net outflows have totaled more than $5 billion in its first few weeks trading as an ETF.

Read more: As GBTC outflows continue, will the largest bitcoin ETF be dethroned?

Some have compared spot bitcoin ETFs to the launch of physically-backed gold ETFs. 

But David Lawant, head of research at crypto prime brokerage FalconX, noted the more competitive landscape this time around, with 10 spot bitcoin ETFs launching on the same day.  

Contrarily, while State Street Global Advisors’ SPDR Gold Shares (GLD) came to market in November 2004, BlackRock’s Gold Trust (IAU) didn’t launch until January 2005. GLD has roughly $55.5 billion in assets, while IAU manages about $25.7 billion.

“Given the differences in the competitive dynamics on the spot [bitcoin] ETF launch versus the gold ETFs launched almost two decades ago, I’d not be surprised to see a group of three to five funds gathering the lion’s share of assets, perhaps with the top three more distant from the rest of the group,” Lawant said.

The FalconX research executive said predicting the ultimate spot bitcoin ETF asset leader is tough at this stage.

“The primary winner in this race is the consumer, who ultimately gets products that offer access to crypto at a highly competitive cost,” he said. “The speed at which the fees got to where they are now suggests that both firms are dead serious about establishing their presence in crypto.”

Excluding GBTC, which sports a fee of 1.5%, the nine other US spot bitcoin ETFs have expense ratios ranging between 0.19% and 0.30%.  

A product by Invesco and Galaxy was the latest to adjust its fee, reducing its price Monday from 0.39% to 0.25% — matching BlackRock and Fidelity.

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