$BTC fell to the lowest price level since the US approved nearly a dozen exchange-traded funds that hold the cryptocurrency last week. A new report from JPMorgan says the historic approval of a spot bitcoin ETF is expected to usher in $36 billion in inflows from existing funds like the Grayscale Bitcoin Trust (GBTC).
The approval was truly a landmark day for crypto with ETFs paving the way for trillions of dollars of surplus investments into the asset. It has also opened options for investors which puts Grayscale products at particular risk of hemorrhaging customers due to the company's high annual management fee of 2%. GBTC also operates like a closed-end fund and cannot create or redeem shares based on market demand. These factor add up to approx. GBTC loosing $3 billion, with investors likely gravitating to one of several ETF options that are waiving fees for six months instead.
On Tuesday, it was revealed that Grayscale Bitcoin Trust sold 8,730 bitcoin, valued at more than $376 million, due tumbling share prices. For comparison $95.1 million exited the fund on January 11. The next day, that number climbed all the way up to $484.1 million. GBTC has pointed out that the total net inflows into Bitcoin investment products are what matters for prices, not substitution from one product to another. They are trying to do some damage control and trying to ensure their customer that lots of this capital will find its way back into other Bitcoin exposures which includes their products.
I can say that the outflows were not too unexpected as more competition arises money with be moved around look for the best return on investment. If GBTC has higher fees it only makes sense to try to rotate into a product with lower fees. I don't know long term how this will impact GBTC's fee structure, but short term it may mean they need to get more competitive with the other offerings.