- Steven McClurg, Chief Investment Officer of Valkyrie Funds, anticipates significant changes in the sector.
- McClurg highlights a challenging situation for existing ETF issuers. Only seven or eight out of ten competitors are expected to survive.
- Since the approval of Bitcoin
spot ETFs by the Securities and Exchange Commission on January 10, there has been an influx of ventures in the industry.
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Details on the challenges that Spot Bitcoin ETF issuers may face, even though everything seems good for them!
Competition Intensifying Among Bitcoin ETF Issuers
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With the introduction of Bitcoin spot ETFs, the cryptocurrency market is buzzing, and Steven McClurg, Chief Investment Officer of Valkyrie Funds, anticipates significant changes in the sector. McClurg predicts that operating costs and intense competition will lead to significant changes among ETF issuers, and these anticipated changes are expected to occur by the end of the year.
In an interview, McClurg emphasized a challenging situation for existing ETF issuers. Among ten competitors, only seven or eight are expected to survive. High operating costs and competitors lowering fees pose serious challenges for struggling issuers.
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McClurg argues that to remain competitive in the ETF market, a minimum of $100 million in assets is required. Since the Securities and Exchange Commission approved Bitcoin spot ETFs on January 10, there has been an influx of ventures in the sector. The first day of trading saw an impressive $4.5 billion in transactions.
Valkyrie competes with industry giants like BlackRock and Fidelity but has shown impressive performance. BlackRock’s iShares Bitcoin ETF and Fidelity’s Wise Origin Bitcoin Fund surpassed $3 billion in assets under management within a month. As of February 8, with approximately $123.7 million in assets, Valkyrie may have a lower volume but seems ready to break records.
Warning Signals Are Sounding!
In response to the highly competitive environment, Valkyrie, like others, has made fee cuts to attract investors, reducing the sponsor fee to an industry-standard 0.25%. McClurg issues a stern warning to ETF issuers, especially regarding profitability challenges faced in terms of operating costs and sustainability. Considering the complex operating costs of Bitcoin spot ETFs and the fierce competition among issuers, measuring assets in the millions is crucial for ensuring the longevity of ETFs.