DOGE ETF now listed! Bitwise "BWOW" challenges Grayscale with a 0.34% fee.

NYSE Arca, a subsidiary of the New York Stock Exchange, has approved the Dogecoin (DOGE) Spot ETF application submitted by Bitwise, with the stock symbol “BWOW”. According to SEC documents, the fund is expected to open for trading on November 26 at Eastern Time, becoming the second Dogecoin ETF to be listed on the US stock market after Grayscale.

BWOW vs Grayscale DOGE ETF in a head-to-head showdown

(Source: SEC)

The listing of Bitwise's BWOW means that the US stock market now has two DOGE ETFs, allowing investors to gain exposure to DOGE through traditional brokerage accounts without the need to directly purchase and hold cryptocurrencies. This convenience is highly attractive for investors who are accustomed to stock trading but are unfamiliar with operating crypto wallets.

The 0.34% management fee is BWOW's core competitive advantage. Compared to Grayscale's DOGE trust, which may have rates as high as 2%-3% (Grayscale has not disclosed the exact rate for its DOGE ETF, but its Bitcoin trust GBTC had a rate of 2% before converting to an ETF), BWOW's rate is significantly lower. For long-term holders, the difference in fees will have a substantial impact on returns. Assuming an investment of $100,000 held for one year, a 0.34% fee means a cost of $340, while a 2% fee would be $2,000, resulting in a difference of $1,660.

What is even more attractive is the first-month promotional policy. The waiver of the sponsor fee for the first $500 million AUM means that early investors may experience an actual rate lower than 0.34% in the first month. This promotional strategy aims to quickly attract capital inflow and establish a sufficient liquidity pool. The success of the DOGE ETF largely depends on whether it can attract enough capital during the initial listing period. If it can reach several hundred million dollars AUM in the first month, it will lay the foundation for subsequent development; conversely, if the first month is quiet, it may become an “empty ETF.”

The largest compliant cryptocurrency exchange in the United States serves as a custodian, which is another significant advantage, as its custody services have supported multiple Bitcoin and Ethereum ETFs. This institutional-level custody not only provides security guarantees but also meets the SEC's stringent requirements for ETF custody. The arrangement of cash being held by Bank of New York Mellon further strengthens the fund's traditional financial attributes, lowering the acceptance threshold for institutional investors.

Comparison of BWOW with Market Competitors

Fee Advantage: 0.34% vs. Grayscale's possible 2%+, significant long-term cost difference

Custodian: The largest compliant crypto exchange in the United States

First Month Offer: No initiation fee for the first 500 million USD AUM

Listing Order: The second DOGE ETF enjoys first-mover advantage.

DOGE ETF faces concerns over capital inflow

Although BWOW was listed today, it remains uncertain whether the DOGE ETF can replicate the success of the Bitcoin ETF. Bloomberg senior ETF analyst Eric Balchunas stated earlier that over the next 6 months, there will be more than 100 Spot or derivative cryptocurrency ETFs continuously supplied to the market, covering mainstream public chain coins such as Solana, Avalanche, Polkadot, and there may even be leverage and inverse products.

However, Balchunas also warned that the inflow of funds into the recently listed altcoin ETFs is not meeting market expectations, coupled with the pullback of Bitcoin and the increasingly fierce market competition. With such a large-scale wave of cryptocurrency ETF listings, it is highly likely that many funds will become shells. This pessimistic prediction is not unfounded, but is based on the actual performance of altcoin ETFs in recent months.

The Bitcoin Spot ETF, launched in January 2024, quickly attracted billions of dollars in capital inflows, with BlackRock's IBIT setting a record for the fastest to reach $100 billion in AUM. However, this success has not been replicated in shitcoin ETFs. Although the already listed Ethereum ETF has also seen capital inflows, its scale is far less than that of the Bitcoin ETF. Smaller shitcoin ETFs have performed even more poorly, with some products having only a few million dollars in AUM weeks after their launch and daily trading volumes of less than a million dollars.

The core challenge faced by the DOGE ETF is the uncertainty of investment demand. Bitcoin is regarded as “digital gold,” possessing a clear narrative for value storage that attracts institutional and retail investors for allocation. Ethereum has a smart contract ecosystem and DeFi applications, backed by solid technical fundamentals. In contrast, while DOGE has a large community and cultural influence, it lacks clear technological innovations or commercial applications, and its value relies more on community sentiment and speculative enthusiasm. This characteristic results in a relatively low willingness of institutional investors to allocate to the DOGE ETF.

Analyzing from the source of funds, the main buyers of Bitcoin ETF include institutional investors such as pension funds, family offices, and registered investment advisors (RIA). These institutions usually have strict investment policies that require the allocated assets to have certain fundamental support and long-term value logic. Whether DOGE ETF can persuade these institutional investors is key to its success. If it can only attract speculative funds from retail investors and the DOGE community, the AUM scale will be limited.

100 lot ETF supply wave may trigger shelling out

Eric Balchunas predicts that over 100 cryptocurrency ETFs will be launched in the next 6 months, and this supply surge poses challenges to the entire market. When product supply far exceeds demand, most products will face the dilemma of liquidity exhaustion. The success of an ETF requires sufficient AUM to cover fixed costs (audit, custody, compliance, marketing, etc.), and if the AUM is too small, the fund will struggle to maintain operations.

The phenomenon of “empty shell ETFs” is not uncommon in the traditional ETF market. The U.S. market has thousands of ETFs, but about 20% of these products have an AUM of less than $50 million, with daily trading volumes of less than $1 million. Although these products are listed, they actually lack liquidity, with huge bid-ask spreads, making it difficult for investors to enter and exit at reasonable prices. If cryptocurrency ETFs also exhibit similar situations, it will damage the reputation of the entire crypto ETF market.

For BWOW, the key to avoiding becoming a shell is whether it can quickly establish AUM scale and trading volume in the early stages of listing. The first month of free offers is designed for this purpose, hoping to attract early capital through cost advantages. However, the effectiveness of this strategy depends on the real demand for DOGE ETF in the market. If demand is insufficient, it will be difficult to attract large amounts of capital even if it is free; if demand is sufficient, capital will continue to flow in even after the offers end.

With the pullback of Bitcoin and the increasingly fierce market competition, the timing for the launch of the DOGE ETF is not ideal. Bitcoin has retreated from a high of $110,000 to around $87,000, and the overall sentiment in the crypto market has turned cautious. In this environment, investors are more inclined to hold mainstream assets like BTC and ETH, leading to a decline in interest in altcoins. BWOW needs to prove itself in this unfavorable environment, which is no small challenge.

DOGE ETF Facing Three Major Challenges

Demand Uncertainty: Institutional investors have low willingness to allocate to meme coins, primarily relying on retail investors and the community.

Oversupply Risk: In the next 6 months, 100 crypto ETFs will be listed, competing for the pool of funds.

Poor market timing: BTC pullback, market sentiment is cautious, unfavorable for new product launches.

How should investors view BWOW

For investors considering investing in BWOW, it is essential to recognize the nature of the DOGE ETF: it is a high-risk, high-volatility speculative tool rather than a value investment target. The price of DOGE is primarily driven by community sentiment, social media buzz, and speculative funds, lacking fundamental support. A tweet from Musk could cause DOGE to surge by 20%, or it could remain stagnant for an extended period due to a lack of news.

However, the DOGE ETF also has its unique value. For investors who believe in the long-term potential of DOGE but do not want to deal with cryptocurrency wallets and exchanges, the ETF provides a convenient investment channel. In addition, the ETF structure offers tax advantages (holding in traditional securities accounts makes tax handling simpler) and liquidity assurance (can be bought and sold at any time during stock market trading hours).

From a configuration perspective, DOGE ETF should be viewed as a satellite allocation within the portfolio, rather than a core holding. It is recommended that the allocation does not exceed 5%-10% of the investment portfolio and is only suitable for investors with a higher risk tolerance. If the DOGE community can drive the implementation of practical application scenarios (such as payment integration, gaming applications, etc.), its long-term value may increase; conversely, if it relies solely on speculative enthusiasm, the long-term performance of BWOW may be disappointing.