Blockchain

Bitcoin appears set to mark its fifth consecutive month of growth, marking its lengthiest winning streak since the pandemic-fueled rally supported by abundant liquidity.

January has witnessed approximately a 2% increase in the largest digital asset, a month characterized by significant fluctuations attributed to the introduction of the first US spot Bitcoin exchange-traded funds (ETFs) and evolving perspectives on monetary policy.

If the trend continues, this five-month winning streak would surpass the previous six-month stretch spanning October 2020 to March 2021, as reported by Bloomberg’s data. Notably, Bitcoin reached an all-time high of nearly $69,000 in November 2021.

The debut of spot Bitcoin ETFs by BlackRock Inc. and Fidelity Investments on January 11 added to the market dynamics. Bitcoin experienced a surge of almost 160% last year in anticipation of these ETF launches, with hopes that they would attract new investors. However, after the funds went live, Bitcoin saw a 12-day drop of about 21%, with close attention from traders monitoring their performance.

The conversion of the $21 billion Grayscale Bitcoin Trust into an ETF format on January 11 initially led to fund outflows. However, the pace of withdrawals has since slowed, aiding Bitcoin in recovering its losses. Sean Farrell, Head of Digital-Asset Strategy at Fundstrat Global Advisors LLC, noted that the deceleration in outflows from the Grayscale fund is a “substantial positive for market sentiment.”

Data compiled by Bloomberg reveals that the ten ETFs, including those from BlackRock and Fidelity, have attracted a net $1 billion so far. Bloomberg Intelligence recognizes this group as having the most successful ETF launch in history, considering both trading and flow metrics.

Investors are also closely watching the Federal Reserve’s interest-rate decision this week, with roughly even odds assigned to the possibility of a rate cut in March. Given the crypto market’s sensitivity to changes in sentiment and perceptions of liquidity, any significant alterations to this outlook could impact Bitcoin and the broader crypto market. As of 7 a.m. Tuesday in London, Bitcoin traded little changed at $43,340, while smaller tokens like BNB and Cardano exhibited mixed performance within relatively narrow ranges.

As the Securities and Exchange Commission (SEC) gears up to decide on approving U.S. spot Bitcoin exchange-traded funds (ETFs), all potential issuers have revealed their fees—a critical factor shaping investor choices.

Among the 13 ETF proposals awaiting SEC green lights, fees span from 0.24% to 1.5%. These fees, calculated as a percentage of the fund’s assets, directly impact what investors pocket. Bitwise, a crypto fund manager, leads the pack with a low 0.24% fee, offering a six-month grace period with no fees. Ark, 21Shares, VanEck, and Franklin Templeton also keep it competitive with fees at 0.25%, 0.25%, and 0.29%, respectively.

BlackRock, the mammoth asset manager, surprises with a 0.30% fee, lower than some predictions. This move might disrupt the playing field, given BlackRock’s stature—many thought they could charge more and still reel in investors. Fidelity clocks in at 0.39%, while Invesco and Galaxy opt for a heftier 0.59%. Valkyrie and Hashdex stand at 0.80% and 0.90% fees, respectively.

Grayscale aims to turn its Grayscale Bitcoin Trust (GBTC) into an ETF but catches attention with a hefty 1.5% fee. Though lower than GBTC’s current 2% management fee, it might not stand up well against other applicants, experts speculate. Yet, Grayscale’s advantage lies in its substantial size, managing over $27 billion, providing a head start compared to others starting from scratch.

For context, the average expense ratio for ETFs in 2022 hovered at 0.37%, says Morningstar. To put it in perspective, the VOO Vanguard S&P 500 ETF—one of the mainstays in stock market index funds—charges a mere 0.03% fee.