Is Grayscale’s GBTC really the best Bitcoin ETF to buy?

Rick Steves

Grayscale has announced a 1.5% management fee, while most competitors will have a management fee ranging between 0.2% and 0.3%.

Grayscale Bitcoin Trust (GBTC)

Now that the Seurities and Exchange Commission approved the listing of Bitcoin ETFs Spot in the United States, there will be strong competition between some of the biggest names within the trading industry.

The regulator officially confirmed the approval of 11 submitted ETFs, including from BlackRock (BLK.N), Ark Investments/21Shares (ABTC.S), Fidelity, Invesco (IVZ.N) and VanEck, despite warnings from some officials and investor advocates that the products carried risks. These ETFs are expected to commence trading today when US markets open at 2.30pm GMT – GBTC is already in pre-market trading.

11 approved ETFs could drive initial influx of $4 billion AUM

Matteo Greco, Research Analyst at digital asset and fintech investment business Fineqia commented on the recent approval of spot Bitcoin ETFs by the US’s SEC and noted that $4 billion are expected to flow into Bitcoin.

“The volatility in the aftermath of the announcement was nearly non-existent, likely influenced by the previous false news that was momentarily believed to be true. This false information, released just 24 hours prior, initially spurred a price increase, followed by a sell-off that brought the price below $45,000 before rebounding and stabilizing around $46,000.

“The news was revealed with BTC trading at approximately $45,000, showing minimal initial volatility. However, the market response was positive, with BTC surging above $47,000 hours after the official announcement and various altcoins experiencing a robust uptrend. Rumors suggest that the 11 approved ETFs could launch with a cumulative Assets Under Management (AUM) of around $4 billion, indicating a substantial initial influx”, said Greco.

Grayscale charges high fees compared to competitors

“It’s crucial to note that the approval also encompasses the conversion of Grayscale Bitcoin Trust (GBTC) into an ETF, which might result in an outflow from the product. GBTC currently holds over 600,000 BTC, and many customers were unable to redeem their shares in previous years due to the product’s structure. This conversion provides an opportunity for these customers to redeem their shares, especially considering the comparatively high fee announced by Grayscale compared to its competitors,” Greco continued.

“Grayscale has announced a 1.5% management fee, while most competitors will have a management fee ranging between 0.2% and 0.3%. This discrepancy could lead to an initial outflow from Grayscale’s product in favour of competitors. However, the impact of this movement may be mitigated by the fact that redeeming shares from Grayscale would trigger a taxable event, potentially dissuading customers from making such a move.”

The 1.5% management fee is, in fact, a discount announced by Grayscale earlier this week ahead of the SEC’s decision. The firm’s previous fee was 2%.

FinanceFeeds gathered expert insights on impact of Bitcoin ETF

While deVere Group chief executive Nigel Green shared five reasons why the price of Bitcoin will skyrocket over the long-term because of the SEC’s decision, Zodia Markets’ Ireland CEO Michael Walsh said speculation over the price of Bitcoin misses the point of such a big move.

In the meantime, Bestinvest’s Jason Holland feels that a Bitcoin ETF will not arrive to the UK anytime soon, HANetf’s Hector McNeil noted that the milestone is similar vein to the creation of gold ETCs in the early 2000s, and CoinFlip’s Ben Weiss expects to see a surge of liquidity, price increases, market expansion, and institutional involvement.

Here you can also read insights from industry leaders at Chainalysis, Fireblocks, and XBTO on how this will impact both the TradFi and digital asset industries.

XReg Consulting’s Nicky Gomez raised concerns about the growing centralization of crypto and its potential departure from core values, emphasizing the possibility of a larger divide within the crypto community.

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