☕️ ETFs: The Race to the Bottom 📉

Now that ETFs are live, a new war is raging on...

Yes, capitalism is a competition, but like war, breakups, and the thieves’ guild, even the gnarliest of games have to abide by certain rules.

Suppose there are several delis on the same block. They can only stand to competitively lower the price of their chicken cheesesteak to a certain point before nobody’s even turning a profit.

And now, with eleven Spot Bitcoin ETFs freshly approved and steaming hot, we’re watching a price race to the bottom.

Like the ultimate game of limbo, the question is, “How low can you go?”

Espresso Shots

☕️ Grayscale Moving BTC 👀

On Tuesday morning, Grayscale transferred 9000 BTC to Coinbase.

This is just the latest move by Grayscale, which has transferred 21,400 BTC out of its wallets in the past 30 days, according to data shared by Ki Young Ju, CEO of CryptoQuant.

However, it’s doubtful that this behavior is directly responsible for the current bear market, as no sales have occurred, and most of the transfers have been to Coinbase, which is designated as Grayscale’s custodian and could just be holding it for safekeeping.

Much like how I had to give my doomsday crossbow, K-rations, and homemade toilet to my neighbor, Kenny, when my wife said they were taking up too much room in the basement. I’ll be back for my crossbow, Kenny, and you keep that toilet warm. We’ll need it when the shit hits the fan.

☕️ Solana’s New Chapter 📕

Solana has revealed its “Chapter 2” Saga Phone after the earlier model was sold due to free giveaways of BONK, Solana’s meme coin.

In the original run of Solana’s phone, the price dropped to $599 in August. When BONK hit its peak of $1,024 last December, scooping up a model with a free BONK airdrop was a no-brainer.

The original run consisted of 20,000 models. Now, in the second release, Solana has touted a lower price but has yet to officially release hardware specs or announce airdrop tie-ins.

This new Saga phone will of course have to compete with the Motorola Razr 3.0, which includes a straight razor and a barber’s strop (that’s what that sharpening belt thing is called).

Spilling the Beans

Fee… Fee Falling 📉

With eleven Bitcoin Spot ETFs approved it means it’s going to be a crowded race.

In any other market, if eleven competitors all arrived at the same time, touting the same product, how would they distinguish themselves?

Well, as any dedicated superstore shopper will tell you, sometimes you can get the same thing at a much lower price.

You don’t need to get your tomatoes from Whole Foods when Wal-Mart will sell you glistening, bio-engineered red monstrosities at a fraction of the cost.

And cutting costs seems to be the mantra in the current ETF scene.

Now, the cost of buying into the ETFs is the same across the board. Investors are buying futures or shares of Bitcoin, they’re investing in BTC rather than buying it directly.

Where the price points differ are in the management fees that each outfit charges for buying into the ETF.

And we’re starting to see those fees fluctuate, dramatically.

In the first several hours after the ETF approvals, Valkyrie reduced its fee from .8% to .49%, as well as announced that Valkryie would charge participants 0 fees for the first three months of their ETF involvement.

And Valkyrie’s hardly alone in the race to the bottom. Invesco lowered its fee to .39%. Both 21 shares, Ark, Van Eck, and Fidelity either dropped or maintained their prices at .25%.

Bitwise, the cheapest out of all the ETF options, lowered fees from .24% to .20%.

If you’re curious how the rest of the ETF fees stacked out, here’s a handy chart:

  • Bitwise 0.20%

  • Ark/21Shares 0.25%

  • Fidelity 0.25%

  • VanEck 0.25%

  • Franklin Templeton 0.29%

  • BlackRock 0.30%

  • WisdomTree 0.30%

  • Invesco/Galaxy 0.39%

  • Valkyrie 0.49%

  • Hashdex 0.90%

  • Grayscale 1.50%

Naturally, you’ll noticed that Grayscale’s price is significantly higher than its competitors.

But this isn’t an Apple or Nintendo situation, where a company charge more because they’re the only iPhone or Mario game in town.

Because Grayscale’s offering the same product with much higher fees, how could that possibly be feasible?

Well, for two simple reasons. First, there’s Grayscale’s size, the Grayscale Bitcoin Trust is the largest Bitcoin ETF in the world. Much like in the wild, with larger size comes a proportional sense of safety and security.

But more important than size alone, Grayscale’s ETF comes with an associated $27 billion in assets under management (AUM), which some analysts have likened to “bringing a gun to a knife fight.”

So, whether you want to cut cost or pay more to roll with the heavy hitter, the choice of ETF or the decision to get involved at all is entirely up to investors.

Consider all the options, listen to analysts, but most importantly DYOR, but if you ultimately choose Grayscale, we won’t blame you, apparently they’re the only ETF with a gun.

The Last Sip

The NRA has said time and time again that the only solution to a Bitcoin Spot ETF with a gun, is an inverse ETF compiled of high-risk, short-selling strategies… that also has a gun.

Stay Caffeinated,

Coffee & Crypto Team

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.