Bitcoin News
Valkyrie’s BRRR September fee waiver explained
BRRR expense ratio falls below IBIT
The Valkyrie Bitcoin Fund (BRRR) reports a 0.00% Total Expense Ratio, which stays below the 0.25% fee that BlackRock’s iShares Bitcoin Trust (IBIT) charges its investors for holding Bitcoin, and the fund began trading on January 10, 2024. While IBIT controls 77% of the total spot Bitcoin ETF assets, the Valkyrie Bitcoin Fund manages $433.35 million in total assets. The Valkyrie Bitcoin Fund began trading on January 10, 2024, and the sponsor initially waived fees for the first three months of trading. Do you think the fee advantage will hold as AUM grows? The fund has a 1-day volume of 9.64K and an average daily volume of 93.21K, whereas IBIT sees much higher activity. The 52-week range for BRRR is $16.37 to $35.70, and the current price sits at $21.40. This fund remains a niche player compared to the massive IBIT, which has accumulated $62.88 billion in cumulative net inflows since its launch.
Performance gaps and asset scale
IBIT maintains a massive lead in scale with approximately $70.6 billion in assets, while BRRR handles $433.35 million. The YTD return for IBIT is -13.31%, whereas the return for BRRR is -13.42%. Over the last year, IBIT lost 21.53% of its value, but BRRR saw a much steeper decline of 35.18%. The 1-month volatility for IBIT is 13.71%, which is slightly higher than the 13.64% volatility for BRRR. IBIT also shows a maximum drawdown of -53.30% compared to the -53.33% maximum drawdown for BRRR. The current drawdown for IBIT is -39.26%, which is slightly better than the -39.17% drawdown for BRRR, while the maximum drawdown for IBIT is -53.30% compared to -53.33% for BRRR. Both funds show extremely similar Sharpe ratios of -0.76 for IBIT and -0.75 for BRRR. IBIT has a Value at Risk (VaR) of 4.04%, while the Martin ratio for IBIT is -0.90 and the Martin ratio for BRRR is -0.90. The 3-month return for BRRR is 14.00%, whereas IBIT’s 3-month average volume is $1.86 billion.
| Metric | Valkyrie (BRRR) | BlackRock (IBIT) |
|---|---|---|
| Total Expense Ratio | 0.00% | 0.25% |
| Assets Under Management | $433.35M | ~$70.6B |
| YTD Return | -13.42% | -13.31% |
| 1-Year Return | -35.18% | -21.53% |
| 1-Month Volatility | 13.64% | 13.71% |
| Max Drawdown | -53.33% | -53.30% |
| 3-Month Avg Vol | $1.38M | $1.86B |
Liquidity and custody risks
Institutional investors weigh custody arrangements when choosing between funds. IBIT uses both Coinbase and Anchorage Digital Bank to hold its Bitcoin, whereas BRRR uses BitGo Trust Company and Coinbase. If you are moving large amounts of money, the low trading volume of BRRR creates a problem. The 3-month average volume for BRRR is only $1.38 million, while the 3-month average volume for IBIT reaches $1.86 billion. This massive disparity in liquidity means BRRR investors face much higher execution risks, especially because the fund’s daily volume is a mere fraction of its competitor’s.
ETF holders do not control private keys and cannot use their Bitcoin in layer 2 protocols. This differs from direct self-custody, where holders maintain full sovereignty over their Bitcoin. While ETFs abstract away the responsibility of managing seed phrases and security practices, they introduce counterparty risk and custody concentration. Coinbase Custody Trust Company holds Bitcoin for 8 of the 11 original ETFs. There are 12 US-listed spot Bitcoin ETFs, including the Grayscale Bitcoin Mini Trust (BTC) with a 0.15% expense ratio, while Grayscale’s original GBTC carries a 1.50% fee. Spot Bitcoin ETFs trade on regulated US exchanges and are available in brokerage accounts and IRAs. IBIT is the clear winner for liquidity despite the lower fee of BRRR.
