BlackRock slashes fee to 0.25% for potential spot bitcoin ETF amid 'brutal' competition

BlackRock has dropped its sponsor fee for its potential spot bitcoin ETF from 0.3% to 0.25% in light of growing competition.

The investment giant has also reduced its temporary discount from 0.2% to 0.12% for the first $5 billion of assets in the first 12 months from launch, according to an S-1 form filed today.

"LOWER: BlackRock has just cut the fee on its spot Bitcoin BTC -2.92% ETF to 0.25% (and 0.12% for the first $5b). They really going for the jugular here, looking to crush the others [before] they even born, just brutal. ARK has also cut to 0.21%. Bitwise [currently] low at 0.20%. Terrordome life," said Bloomberg ETF analyst Eric Balchunas on X.

Ark Invest/21Shares also cut its fee from 0.25% to 0.21% — and is maintaining its zero fees for the first six months or until $1 billion in assets, per its latest S-1 form.

Bitwise is planning to offer the lowest fee among the competing products, with a 0.2% fee and zero fees for the first six months or until the first $1 billion in assets.

On Tuesday, Fidelity dropped its fee from 0.39% to 0.25%. It also plans to waive the fee for market participants until July 31.

Multiple other competing issuers lowered their fees yesterday, too — with Valkyrie going from 0.80% to 0.49%, Invesco Galaxy from 0.59% to 0.39% and WisdomTree from 0.50% to 0.30%. Multiple providers are offering zero fees for a limited time, too.

Why are fees going so low?

U.S. contenders seeking to push out the first line of spot bitcoin ETFs have been competing to attract the market by lowering fees upon the looming potential approval from the Securities and Exchange Commission. The idea is that offering low fees to attract market share in the early days could pay dividends down the line.

VanEck estimates spot bitcoin ETFs will see $1 billion in inflows in the first few days and $2.4 billion within a quarter. Galaxy predicts inflows at $14 billion within the first year. Looking further ahead, Bitwise anticipates around $72 billion of market size within five years.

This comes after the SEC's X account was compromised to post a fake spot bitcoin ETF approval message. The SEC plans to work with law enforcement to investigate the breach. Despite this, industry experts are still anticipating that approvals should come through today and the products should start trading tomorrow.