Why Is GBTC Killing Itself?
The question that has baffled Bitcoin Twitter as mass outflows kneecap the industry leader.
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Just 12 days ago on January 11th, 10 new spot bitcoin ETFs were launched. Among them was Grayscale, who wasn’t launching a product, but converting one with an almost decade-long track record under its belt and $28 billion in assets under management. Not two weeks later, the fund is $7 billion lighter.
Why? It decided to charge a 1.5% management fee, more than 100 basis points more expensive than its most expensive competitor. Additionally, its counterparts have waived their management fees for as long as a full year from launch. This has created immense selling pressure on bitcoin, as investors dump GBTC for lower-fee competitors and flee for cash after years under the thumb of an oppressive discount.
Bitcoin tumbled $10,000 from its local high reached on the morning of the mass launch, a bloodbath for the uninitiated (of which there are many!):
Why is Grayscale sitting idly by as a multi-billion dollar exodus from its largest fund is underway? That’s the operative question, indeed. Is this a game of high-level 4-D chess from Sonnenshein, or ritual suicide by woeful mismanagement and overestimation of investors caring about industry reputation?
We will answer the most important question first: when will outflows from GBTC and the follow-up selling of spot BTC by Grayscale subside and stop hurting bitcoin’s price?