About three months ago, Bitcoin (BTC) spot exchange-traded funds (ETFs) hit the U.S. stock markets. The launch proved to be a huge success, surpassed only by Grayscale’s GBTC. While the big newcomers like BlackRock and Fidelity rake in billions of dollars every month, GBTC loses a lot of money every trading day. High fees are the main reason for capital flight. However, the crypto asset manager is in no hurry to withdraw this.
Cost reduction of Grayscale’s Bitcoin ETF
GBTC was founded in 2015 as a regular trust fund and converted to a spot ETF last January following bulk ETF approval from the US Securities and Exchange Commission (SEC).
At the historic launch of stock market funds, Grayscale already had a huge mountain of Bitcoins for its ETF. To be precise, Grayscale held more than 600,000 Bitcoins as collateral for its fund at the time.
According to Farside Investors, more than $16 billion has flowed out of the fund in three months. Grayscale’s relatively high fees play an important role in the significant outflows. In fact, GBTC has the highest management fees of any US Bitcoin ETF – at 1.5% per year, compared to the 0.30% average among its peers.
Grayscale CEO Michael Sonnenshein said at Canaccord Genuity’s Digital Assets Symposium last Wednesday that costs will eventually be reduced, but only when exchange products “start to mature.”
Sonnenshein noted that markets typically react very enthusiastically when new exchange products such as Bitcoin spot ETFs come to market. He emphasized that ETFs are still at this early stage. As time goes on and the market stabilizes, investors will put their money into fewer products, which the CEO believes will lead to a reduction in costs.
The GBTC outflow is not over yet
As previously mentioned, since GBTC converted to a spot ETF, there hasn’t been a single trading day where the fund hasn’t shrunk. However, there wasn’t much difference last Wednesday. That day saw the lowest net outflows since the ETF’s launch, at $17.5 million each.
However, yesterday, outflows reached $124.9 million again, reducing expectations of a trend reversal. If the outflows end, it would logically be positive for the Bitcoin price.
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