BRRR May Be Losing The Race As A Bitcoin ETF

Summary BRRR offers secure, direct spot bitcoin exposure via cold storage but lacks differentiation beyond fees and liquidity compared to peers. Bitcoin ETFs, including BRRR, are highly correlated with equities and US rates, raising questions about true decentralization and concentration risks. Given IBIT’s superior liquidity and similar fees, I rate BRRR as Hold, seeing better alternatives for bitcoin ETF exposure. The CoinShares Bitcoin ETF ( BRRR ) is an investment strategy designed to provide investors with direct exposure to spot bitcoin. The strategy utilizes cold storage for holding assets, creating a differentiated and more secured strategy for investors seeking exposure in bitcoin. BRRR was launched on January 10, 2024, following the approval by the SEC for the launch of bitcoin spot ETFs. CoinShares acts as the sponsor of BRRR, while US Bancorp Fund Services is the administrator. BRRR utilizes Coinbase Custody Trust Company ( COIN ), BitGo Trust Company, and Komainu Limited for custodian services. BRRR is indexed to the CME CF Benchmarks Bitcoin Reference Rate. BRRR utilizes cold storage with its custodians in the Vault Account, meaning that the bitcoin held is stored offline, disconnected from the Internet. This can add a certain layer of safety protocol to the assets as cybersecurity risks are generally mitigated. Seeking Alpha BRRR charges a sponsor fee of 25bps, in line with peer bitcoin ETFs. For all intents and purposes, bitcoin spot ETFs have no differentiation in terms of investment strategy, each moving in tandem with the price of bitcoin. The core differentiators will be fees and liquidity. By comparison, I believe that the best bitcoin spot ETF to invest in would be the lowest of cost ETF that provides enough liquidity with minimal spread risk. From a fee perspective, VanEck’s ( HODL ) may prove to be the most appealing on the market as the sponsorship fee is waived until January 2026. Seeking Alpha Aside from fees, a major differentiator may be assets under management and fund flows . Many of the bitcoin ETFs have remained relatively stagnant since launching at the beginning of 2024 in terms of net asset growth, while BlackRock ( IBIT ) has consistently grown above all others. Given that bitcoin ETFs may be used for liquidity in the market, ETF liquidity may be just as important as investing in a low-fee strategy. BRRR has roughly $655mm in assets under management with an average of 186k shares changing hands on a daily basis. By comparison, IBIT has accumulated roughly $84b in net assets since launch and has an average daily trading volume of 45mm shares. Bitcoin ETF Fund Flows From a tactical perspective, BRRR is directionally correlated with the S&P 500 ( SPX ) to a certain degree. Some estimate that bitcoin has an 83% correlation to the SPX. I believe that the driving factor behind this high level of correlation is the broad adoption of investors holding bitcoin ETFs within retirement accounts. Given that bitcoin is now viewed as an alternative asset class for retirement accounts, bitcoin ETFs will likely be utilized similarly to other asset classes in relation to the functions of a financial advisor, such as portfolio rebalancing, allocations, and cash raises. This can potentially deteriorate the decentralized aspect of bitcoin. TradingView Interestingly enough, bitcoin faced some selling pressure following recent news of Cleveland Federal Reserve President Beth Hammack not supporting an interest rate cut. This may suggest that bitcoin exhibits a certain degree of correlation to the interest rate policy set by the Federal Reserve, making bitcoin more of an extension of the US Dollar as opposed to being an uncorrelated, independent asset. In addition to this, bitcoin exhibits some correlation to the 10-year treasury rate, suggesting that the price of bitcoin may be more tied to US rates than one may have expected. TradingView In terms of the growth trajectory for bitcoin, Bernstein analysts expect bitcoin’s rally to continue into 2026 and potentially into 2027, expecting bitcoin to run up to $200,000/BTC. Though this is an achievable price target for bitcoin, climbing to those levels appears to face some skepticism given that bitcoin tactically faces some chop at around $120k per coin. From a tactical standpoint, bitcoin may be moving more into a bearish trend rather than one that would push the token to $200k/BTC. TradingView Risks Related to Bitcoin ETFs Bitcoin ETFs exhibit concentration risk as a single-asset investment strategy. If investing in BRRR or other bitcoin ETFs, the investor should use a weighted portfolio approach to ensure exposure is balanced. The federal government is weighing the use of BitBond issuances to cover payments of the national debt. With the federal government moving into the cryptocurrency space, the decentralized appeal may be declining. Bitcoin is also becoming more heavily invested in by institutional investors as a component of an investment portfolio strategy; bitcoin may be subject to rebalancing, asset rotation, and cash raises. Final Thoughts Considering peer bitcoin spot ETFs, I believe BRRR may be a less optimal strategy for investment purposes. Given the stronger trading depth and similar fee in IBIT, I believe other bitcoin strategies may be more appealing for investors. I am recommending BRRR with a Hold rating.