European bitcoin ETPs suffer mounting outflows

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European bitcoin exchange traded products have suffered outflows every month this year, despite providers’ hopes being raised following the approval of spot bitcoin ETFs in the US.

Bitcoin ETPs domiciled in Europe have bled $506mn since the start of this year, while other crypto ETPs attracted small net inflows of $42mn, Morningstar data shows. The price of bitcoin rose approximately 40 per cent over this period.

The findings come as crypto product providers seek to capitalise on institutional demand for digital assets, with the UK regulator approving the first listings of bitcoin ETPs on the London Stock Exchange.

The European outflows contrast with $13.4bn of inflows enjoyed by crypto products domiciled in the US, where the financial regulator approved the launch of spot bitcoin ETFs for the first time in January.

This article was previously published by Ignites Europe, a title owned by the FT Group.

Pierre Debru, head of quantitative research and multi-asset solutions at WisdomTree, said the number of client queries for European crypto ETPs had “greatly increased” since the US launches, but this had not yet translated into large inflows.

Debru added that the low fees charged by US bitcoin ETFs had “created a new fee environment in Europe” by forcing European issuers to reduce their charges.

WisdomTree was one of several asset managers to slash fees on its bitcoin ETPs following the US launches, along with Invesco and CoinShares.

Monika Calay, director of UK manager research at Morningstar, said understanding short-term bitcoin fund flows this year “is no simple task” and that market sentiment “remains fragmented”.

“Some view it as an inflation hedge, others see it as a novel currency, and many consider it alongside other high-risk assets,” she said.

Calay added that the recent bitcoin halving, which saw the rate at which bitcoin is issued cut in half in order to maintain its scarcity, was a “significant event” in the cryptocurrency’s history that could “significantly impact” bitcoin ETP flows.

“Historically, such halving events have led to supply shocks, sparking both increased interest and speculation within the crypto community, [but] May has already seen a rally,” she said.

“As the narrative around bitcoin evolves, market participants must navigate the complexities and uncertainties surrounding this unique asset class,” she added.

US-headquartered ETF provider VanEck said at the time that US spot bitcoin ETFs were launched that it planned to be “more aggressive” in marketing its crypto products in Europe following the US launches.

Martijn Rozemuller, chief executive officer of VanEck’s European business, said his company had seen a small net inflow into its bitcoin and ethereum exchange traded note this year.

These inflows have come especially around the period of the US approval decision and in recent months where bitcoin and other crypto assets have shown “significant price recovery”, he said.

The firm’s European digital assets ETNs have had net inflows of €8.5mn in 2024, with assets rising to €650mn, according to Morningstar data.

“Total potential market size considered, European crypto ETPs are still relatively larger than the spot bitcoin ETFs in the US,” Rozemuller said.

Bitcoin ETPs in Europe managed assets of $6.4bn at the end of April, while in the US the funds have assets totalling $53.5bn, Morningstar data shows.

*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at igniteseurope.com.