ETFs emerging as preferred bitcoin holding structure

Bitcoin ETFs are becoming the dominant vehicle for institutional Bitcoin allocation. Over the past year, global crypto ETF assets under management (AUM) have surged 950%, reaching $134.5 billion by November 2024.

This shift is being driven by institutional capital flows, with major firms such as Morgan Stanley, Goldman Sachs, and the State of Michigan Retirement System each allocating over $100 million into Bitcoin ETFs in 2024, further normalising Bitcoin as an investable asset class.

As large-scale capital moves into ETFs, the stigma around Bitcoin is diminishing, and ETF structures are increasingly preferred over direct exchange holdings. In response to this institutional demand, Bitcoin ETF fees are declining globally, making them an even more compelling alternative to crypto exchanges.

Why Are Investors Choosing ETFs Over Crypto Exchanges?

• ETFs Are Absorbing More of Bitcoin’s Market Cap – Bitcoin ETFs now hold 3.7% of all Bitcoin in circulation, compared to gold ETFs which hold just 1.2% of the total value of gold. This suggests Bitcoin ETFs are becoming a preferred store-of-value investment.
  
  

• A Shift Away from Offshore Exchanges – Regulatory scrutiny on offshore exchanges, plus increasing ETF adoption, has accelerated a trend where investors prefer ETFs over self-custody or crypto exchange-based trading.
  
  

• Lower Costs & Greater Market Efficiency – Australian crypto exchanges typically charge 0.50% to 1.00% per trade, plus withdrawal fees and price spreads. In contrast, Bitcoin ETFs provide a transparent annual management fee with no additional transaction costs when held in a brokerage or investment account.

The Race to Lower Fees in Crypto ETFs

In the U.S., leading Bitcoin ETFs now charge between 0.15% and 0.25%, making them increasingly competitive with crypto exchanges. In Australia, the Monochrome Bitcoin ETF (IBTC) recently lowered its management fee to 0.25%, making it the most cost-efficient Bitcoin ETF in the country.

With Monochrome offering the lowest fees in Australia (0.25%), local investors now have a cost-efficient alternative that is more in line with the fee structures of leading U.S. ETFs.

Why Costs Matter in ETF Selection

ETF management fees directly impact long-term performance. A lower fee structure allows investors to retain more of their investment gains, making ETFs with lower costs more attractive—particularly for institutional investors and self-managed super funds (SMSFs) looking for cost-efficient, regulated Bitcoin and digital asset exposure.

The Takeaway

With regulated access and cost efficiency becoming defining factors, Bitcoin ETFs are increasingly the preferred vehicle for Bitcoin investment, offering Australian investors a low-cost, globally competitive alternative to direct crypto exchange purchases.

About Monochrome Bitcoin ETF (IBTC) and Monochrome Ethereum ETF (IETH)

IBTC and IETH are Australia’s only crypto-asset ETFs that support two-way in-kind transfers—allowing direct deposits and redemptions in Bitcoin and Ethereum. Now, with a 0.25% management fee, they are also the lowest-cost Bitcoin and Ethereum ETFs in the country. Visit ibtc.au for more information.