Experts: Grayscale’s Bitcoin ETF Fees Not Fixed


Grayscale is launching a smaller Bitcoin ETF that’s way cheaper than the current one, almost ten times less expensive. But Eric Balchunas, a Bloomberg analyst, says it’s too early to celebrate.

Grayscale claims their new “mini” version of the Bitcoin Trust ETF will have fees nearly one-tenth of what they charge now, making it the most affordable among the spot Bitcoin ETFs that are allowed.

Grayscale’s Bitcoin Mini ETF Fees: A Cautionary Tale

Bloomberg analyst Eric Balchunas advises investors not to jump the gun just yet. He points out that the fees announced by Grayscale for their upcoming Grayscale Bitcoin Mini Trust (BTC) are preliminary and subject to change before the launch. Balchunas stresses that these fees are currently based on pro-forma financials and should be considered hypothetical at this stage.

In a post on April 20, Balchunas highlighted the significance of the chosen fee of 15 basis points (bps), stating that Grayscale likely aimed to attract investor attention with this figure. While acknowledging the attention-grabbing nature of the proposed fees, he emphasizes the speculative nature of these figures until the ETF is officially launched.

Source: Eric Balchunas

Grayscale’s proposal entails setting the fees for the Grayscale Bitcoin Mini Trust (BTC) at one-tenth of the current 1.5% fee for their flagship Grayscale Bitcoin Trust (GBTC). This move, outlined in a recent filing with the United States Securities and Exchange Commission (SEC), aims to position the new ETF as a more cost-effective option for investors. However, Balchunas warns against premature excitement, reminding stakeholders to remain cautious until the details are finalized closer to the ETF’s launch.

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Grayscale’s Competitive Fee Strategy for Bitcoin ETFs

Grayscale is positioning its upcoming ETF with a suggested fee of 0.15%, aiming to offer the lowest fees among the 11 approved spot Bitcoin ETFs introduced in January. Franklin Templeton closely follows with a fee of 0.19%. Trailing behind are the Bitwise Bitcoin ETF (BITB) and VanEck Bitcoin Trust (HODL), both at 0.20%.

Thomas Fahrer, CEO of the crypto-focused reviews portal Apollo, emphasized the necessity for Grayscale to provide a cost-effective alternative. With a significant outflow of 315,000 BTC since its launch, Grayscale aimed to address this issue by offering lower fees. Fahrer shared his insights with his 42,900 followers on X in an April 21 post, suggesting that Grayscale’s fee reduction strategy is aimed at mitigating the substantial outflows experienced by the Grayscale Bitcoin Trust (GBTC).

GBTC Outflows Prompt Shift in Investor Preference

The launch of Bitcoin ETFs in January has triggered a significant shift in investor behavior, with many opting to withdraw funds from Grayscale’s GBTC product. These Bitcoin ETFs offer a more competitive fee structure for gaining exposure to Bitcoin, prompting investors to reconsider their investment choices.

According to data from Farside, since the introduction of spot Bitcoin ETFs on January 11, GBTC has experienced approximately $16.73 billion in outflows. This substantial outflow reflects investors’ growing preference for alternatives with lower fees and potentially better performance.

In response to this trend, new Bitcoin trusts are planned to be distributed to existing GBTC shareholders. Additionally, GBTC itself will contribute an undisclosed amount of Bitcoin to the new trust, signaling efforts to adapt to changing market dynamics and retain investor interest.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.


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