When choosing a bitcoin ETF, investors would consider fees, liquidity, and brand.

A large number of spot bitcoin exchange-traded funds (ETFs) could soon receive simultaneous approval from the US Securities and Exchange Commission.

With over a dozen companies keen to introduce these products, this move might spark a competitive scramble among them, providing institutional and ordinary investors with a wide array of choices. Industry observers predicted that some consumers would compare costs and corporate brands to other factors. The fund issuers who intend to launch spot bitcoin funds have already made an effort to set themselves apart from rivals.

Continue reading: Fortunate 13? Where are the proposals for spot bitcoin ETFs stand before the verdict? In a congested market, competing companies are already planning their strategies to distinguish out. Certain companies, like Bitwise and Hashdex, are taking advantage of their reputation as experts in the cryptocurrency industry by launching concentrated marketing efforts that highlight their knowledge of the market. Some seem ready to provide a more alluring cost than competitors.

Updated its ETF application recently, Fidelity, a large financial services company specializing in retirement services and investment management, set its sponsor fee at a competitive 39 basis points, or 0.39%. This aggressive pricing strategy could be a game changer in luring investors who are cost conscious, as it is the lowest of all the firms who have disclosed a charge.

On the other hand, the Invesco and Galaxy Digital-proposed spot bitcoin ETF plans to charge a higher fee of 0.59% (59 basis points). But for the first five billion dollars in trust assets over the first six months of trading, it intends to waive fees.

Continue reading: Fees, seeds, and APs: What we know and don't know about the next bitcoin exchange-traded funds Bryan Armour, director of North American passive strategies research at Morningstar, says that for buy-and-hold investors, the fund's cost is probably going to be the most important consideration when deciding which spot bitcoin ETF to purchase.

Beyond the cost and promotion

While fund fees and ads may influence some investors, others will take other considerations into account.

Liquidity, which translates to smaller bid/ask gaps and the ability to make big trades with little effect on price, will be more important to traders and those who are actively trading these ETFs than fees, according to Armour, who spoke with Blockworks.

The trading infrastructure and capital markets of issuers will also be crucial. Fund groups have mentioned that cash creations and redemptions will be a feature of their proposed bitcoin ETFs in recent changes to their applications—a technique that the SEC appears to like.

Possible order of events

According to Dave Nadig, a financial futurist with data company VettaFi, the manner in which the funds trade in the beginning will matter. He stated that having strong market makers, approved participants, and enough institutional traders to maintain volume will be "absolutely critical" for the fund issuers.

Nadig informed Blockworks, "At the end of the first week, there will be some funds at the top and some at the bottom of the liquidity list." "It's hard to predict because these issuers are usually well-established and have excellent relationships with the street."

Since its 2013 founding, the Grayscale Bitcoin Trust (GBTC) has managed assets valued at around $27.8 billion. Grayscale wants to make the trust an exchange-traded fund (ETF).

Given its already strong market position, GBTC might prevail in an asset race, but according to Nadig, there is a "counter case" where investors withdraw their funds from GBTC and transfer them to a less expensive ETF or one that may be performing better.

At present, GBTC levies an annual fee of 2%. The company promised to reduce GBTC's costs in the event of an ETF conversion, although it did not say by how much. There is no mention of a proposed fee in its most recent ETF application revision.

According to Nadig, retail investors would focus especially on marketing and fees after the initial trading activity.

As of right now, assets held by US ETFs exceed $6.4 trillion, according to ETF.com. According to a Nasdaq survey conducted in April 2022, 72% of financial advisors said they would be more inclined to invest client funds in the cryptocurrency space if a US spot bitcoin ETF was offered.