European Bitcoin exchange-traded products (ETPs) have seen significant outflows in 2024, losing $506 million since the beginning of the year, according to data from Morningstar. In contrast, other crypto ETPs have experienced modest net inflows of $42 million.
Despite a 40% increase in Bitcoin’s price during this period, European Bitcoin ETPs have not been able to prevent the outflows. The approval of spot Bitcoin ETFs in the U.S., which led to $13.4 billion in inflows, has not had the same positive impact on the European market.
The approval of spot Bitcoin ETFs in the U.S. has created a new fee environment in Europe, with U.S. Bitcoin ETFs typically having lower fees. As a result, European issuers have been forced to reduce their charges in order to remain competitive. Several asset managers, including WisdomTree, Invesco, and CoinShares, have already reduced fees on their Bitcoin ETPs.
The recent Bitcoin halving event, which reduced the rate at which Bitcoin is issued, is seen as a significant factor that could impact Bitcoin ETP flows. The long-term effects of this event are still being closely monitored by investors.
VanEck, a U.S.-based ETF provider, has also observed the effects of the U.S. approval decision on its European business. The company has seen small net inflows into its Bitcoin and ethereum exchange-traded notes this year, particularly around the time of the U.S. approval decision and during recent months of price recovery for Bitcoin and other crypto assets.
Despite rising interest in digital assets and competitive adjustments, the European Bitcoin ETP market continues to face challenges. The future dynamics of European crypto investments will likely be shaped by market developments and regulatory decisions in the U.S.