Bitcoin exchange-traded products (ETPs) face $50.6 billion in outflows. According to Morningstar data, European Bitcoin ETPs have lost $506 million since the beginning of the year. In contrast, other cryptocurrency ETPs have seen net inflows of $42 million.

During this period, the price of Bitcoin has risen by about 40%. However, this growth was not enough to prevent outflows from European Bitcoin ETPs. Providers hoped that the approval of spot Bitcoin ETFs in the United States would have a positive impact on the European market, but the opposite happened.

US Spot Bitcoin ETFs Impact European Market Dynamics

U.S. financial regulators approved the issuance of spot Bitcoin ETFs in January, resulting in inflows of $13.4 billion. This is in stark contrast to the situation in Europe, where the approval of ETFs has created a new fee environment. U.S. Bitcoin ETFs generally have lower fees, which has put pressure on European issuers to reduce their fees.

Pierre Debru, head of quantitative research and multi-asset solutions at WisdomTree, highlighted the increase in client inquiries for European crypto ETPs following the launch of Bitcoin ETPs in the United States. However, this interest has not yet led to significant inflows. He noted that several asset managers, including WisdomTree, Invesco and CoinShares, have lowered fees on Bitcoin ETPs to remain competitive.

Does Bitcoin halving affect the demand for ETPs?

Monika Calay, head of UK manager research at Morningstar, highlighted the complexity of understanding short-term bitcoin fund liquidity. She said the recent bitcoin halving event, a slowdown in the rate at which bitcoin is issued, is seen as a significant factor that could affect the liquidity of bitcoin ETP funds.

Calay added that the Bitcoin halving event has been a focus for many investors, and its long-term impact is still being closely watched.

VanEck reports small growth after U.S. approval

VanEck, a U.S.-based ETF provider, has also observed the impact of the U.S. approval decision on its European business. Martijn Rozemuller, CEO of VanEck’s European business, reported that its Bitcoin and Ethereum exchange-traded notes have achieved small net inflows this year. These inflows are particularly notable at the time of the U.S. approval decision and during the price recovery of Bitcoin and other crypto assets in recent months.

Morningstar data shows that VanEck’s European digital asset ETNs saw net inflows of €8.5 million in 2024, with assets growing to €650 million. Rozemuller commented on the potential market size, noting that European crypto ETPs had $6.4 billion in assets at the end of April, which is still relatively large compared to the U.S.’s $53.5 billion.

Despite growing interest in digital assets and competitive regulation, the European Bitcoin ETP market faces challenges. The impact of US market developments and regulatory decisions may play a key role in shaping the future dynamics of European cryptocurrency investments.