VanEck Cuts Fee on HODL, Day After Trading Surge

VanEck Cuts Fee on HODL, Day After Trading Surge

HODL's trading volume skyrocketed past $400 million Tuesday.

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Finance Reporter
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Reviewed by: etf.com Staff
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Edited by: Ron Day

VanEck cut the fee on its spot bitcoin ETF to match the second lowest expense ratio on the market, a day after a massive and seemingly unexplained surge in the fund's trading.

VanEck lowered the expense ratio on the VanEck Bitcoin Trust (HODL) to 0.20% from its previous 0.25%, making it one of the most competitive of the 10 spot bitcoin ETF products that launched last month in what was a historic first for the market. The firm filed with the SEC to cut their fee last week.

Slashing fees to gain market share is a hallmark of the ETF industry. VanEck's new fee now matches Bitwise Asset Management’s Bitwise Bitcoin ETF (BITB) which previously set the bar for the lowest expense ratio at 0.20%. Franklin Templeton Investments lowered their fee on their Franklin Bitcoin ETF (EZBC) to 0.19% in mid January. Bitwise had a fee waiver in place for the first $1 billion in assets, a benchmark the fund crossed on Feb. 15. 

Since their launch, firms including Invesco Ltd. and Bitwise Asset Management have further lowered their already competitive expense ratios. 

"It's important for us to be competitive in this arena, and obviously it's crowded," VanEck Head of ETF Product Ed Lopez told etf.com. "We [have been] reassessing the space as the dust settles after the initial launch and looking at our position in the marketplace and making sure we're as competitive as we can be."  

The group of nine novel spot bitcoin funds, which hit the market simultaneously on Jan. 11, give investors exposure to physically backed bitcoin, as opposed to bitcoin futures contracts.  

The slashing of HODL's fee comes amid a spike in trading volume on Feb. 20. Over $400 million in shares traded, nearly 70 times the $6 million traded the previous day, according to data from Bloomberg.

The activity surge perplexed analysts and market watchers as because it the trades were placed by individual investors, not a large institutional investor, which is more typically the case in such a scenario.

“Still haven’t figured out what happened. No one knows,” wrote Bloomberg ETF analyst Eric Balchunas on Twitter/X. “Feels retail army-ish,” he continued.

Lopez said he was unsure of why the fund saw such a sudden uptick in trading volume. "It's really hard to determine who is buying your ETF or why because it trades on the secondary market," he said. "It's coincidental that it happened right around the time that the fee cut was being implemented."

Spot Bitcoin ETF Wars

The fee cuts come after BlackRock Inc.’s iShares Bitcoin Trust (IBIT) and Fidelity Investment’s Fidelity Wise Origin Bitcoin Fund (FBTC) have broken from the pack and garnered billions in inflows. BlackRock surpassed $5 billion in inflows in mid-February.

VanEck’s fee change could draw more investors to the fund and boost its assets. Currently, the fund has $190.7 million in assets, compared to IBIT’s $6 billion in assets, according to etf.com.

Contact Lucy Brewster at [email protected].

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.