Australia's DigitalX Slashes Costs, Reports 99% Annual Gain in Bitcoin Fund

Australian crypto fund manager DigitalX plans to position itself as a “flag bearer” for digital assets, preparing for what it sees as the crypto industry's “mainstream moment” following major breakthroughs and global political shifts, particularly in the U.S.

DigitalX said Thursday it is undergoing significant cost reductions for its operations, cutting $950,000 (US$614,000) in annualized costs through restructuring its funds management team.

Its Bitcoin fund, meanwhile, has posted 99% in yearly gains, outpacing its rivals across multiple timeframes, showing 12% gains over six months and 30% over three years.

As for its Digital Asset Fund, returns of over 526% over five years were shown despite a slight decline of 2.1% in the past quarter, according to the company's latest shareholder update.

Crypto has experienced significant year-to-date gains, with Bitcoin posting a 106% increase to $87,500. The industry's profile has been bolstered by U.S. listings of spot Bitcoin and Ethereum exchange-traded funds and a Republican victory in the presidential race, viewed by many as clearing a path to definitive regulations impacting digital assets.

DigitalX offers two separate Bitcoin investment products: a Bitcoin Fund for wholesale investors and a Bitcoin ETF (BTXX) for retail investors, each designed to provide exposure to the asset through different structures and access methods.

Listed on the Australian Securities Exchange (ASX) earlier in July, DigitalXs spot Bitcoin ETF is one of several crypto ETFs in the country, including VanEck's VBTC, which is also listed on the ASX.

Other crypto ETFs include Global X 21Shares' EBTC and Monochrome's IBTC, both listed on Cboe Australia.

The Perth-based fund manager claims despite its restructuring, it maintains what it describes as a “safe pair of hands” approach to client investments.

Unlike VanEck's offering, which gains exposure through a U.S.-listed trust, BTXX provides direct Bitcoin exposure without US intermediary exposure, potentially insulating Australian investors from US regulatory developments.

Notably, the ASX listings are considered more significant as the exchange handles about 80% of the country's equities trading volume. The DigitalX ETF offering has seen its unit price rise from $20 (US$12.93) at launch to $31.09 ($US20.10).

“Following the end of Financial Year 2024, the Board knew that it had to make changes to the company's costs to ensure that we remained sustainable and capable of executing our business plan,” DigitalX Chair Toby Hicks wrote in a statement.

The company acknowledges several challenges in raising funds under management despite solid performance, citing a relatively small addressable investor market compared to traditional investment products.

DigitalXs strategic shift comes amid expectations of regulatory changes in the U.S. following Donald Trump's recent presidential victory.

Hicks notes that such a political climate opens the prospect for “greater regulatory clarity within and from the U.S.,” which could create opportunities for the company and its investors.