Grayscale may be maintaining high fees for its spot Bitcoin exchange-traded fund (ETF), GBTC, to deter holders from cashing out, while betting on Bitcoin’s upward trajectory, suggests one market analyst.
GBTC has experienced daily outflows since its launch, totaling over $14 billion by March 25. Analysts, including Bianco Research founder Jim Bianco, attribute this to GBTC’s 1.5% annual management fee, significantly higher than the average of other spot Bitcoin ETFs at 0.30%.
Grayscale might be keeping the high fee as a strategic move, banking on holders being “stuck” due to tax implications or anticipating a substantial rise in Bitcoin’s price.
With nearly $24.7 billion in assets under management, Grayscale might be speculating that Bitcoin’s price surge will offset outflows and increase their assets.
However, if Bitcoin’s price falls, this strategy could backfire, leading to increased selling pressure. Bloomberg ETF analyst Eric Balchunas suggests that Grayscale could maintain revenue if Bitcoin’s price rises.
GBTC’s lawsuit against the Securities and Exchange Commission (SEC) paved the way for US spot Bitcoin ETFs. Despite this, Grayscale’s management of GBTC’s fees has raised questions.
Analysts speculate various motives behind Grayscale’s fee strategy, including strategic positioning in a competitive market and potential involvement in addressing issues with bankrupt crypto lender Genesis, a subsidiary of Digital Currency Group (DCG), like Grayscale.
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