American digital asset management company, Grayscale has been experiencing a series of outflows in its Spot Bitcoin Exchange Traded Fund (ETF) in recent times. As a result, the company has attempted to potentially curb the massive exodus, promising to lower ETF fees soon.
Grayscale To Reduce Bitcoin ETF Fees
In a recent interview, Grayscale’s Chief Executive Officer (CEO), Michael Sonnenshein, disclosed to CNBC that the fees for the company’s Spot Bitcoin ETF (GBTC) will decrease over time.
Since the start of trading, after the United States Securities and Exchange Commission (SEC) approved Spot Bitcoin ETFs, Grayscale has failed to record a significant daily net inflow. However, the asset management firm has steadily experienced outflows worth billions of dollars.
“Of course, we anticipated having outflows. Investors have been wanting to either take gains on their portfolio, or arbitragers coming out of the fund, or people unwinding positions that were part of bankruptcies through forced liquidation,” Sonnenshein stated.
The company’s decision to lower fees marks a shift from its earlier position, where it justified charging investors a higher-than-average fee compared to other Spot Bitcoin ETFs in the market. Presently, Grayscale’s GBTC maintains the highest ETF fee by a wide margin, charging investors approximately 1.5% in fees.
Grayscale’s ETF fee stands in stark contrast to the fees maintained by other leading asset management companies, such as BlackRock, and Bitwise, which charge 0.25% and 0.21%, respectively. Impressively, these companies, particularly BlackRock, have been seeing a considerable amount of inflows in its ETF, making headlines as they experience a surge in investor demand.
Despite previously advocating the firm’s exorbitant ETF fees, Sonnenshein appears to have acknowledged market sentiment, announcing a reduction in its Spot Bitcoin ETF fees as the market continues to grow and mature.
GBTC Witnesses Massive Outflows
Grayscale’s sudden change of heart on retaining its lofty ETF fee may be attributed to the recent surge in outflows from its Spot Bitcoin ETF. The asset management company has been witnessing a steady sell-off, totalling $12 billion in outflows since it began trading on January 11.
On Monday, March 18, Grayscale recorded its largest outflow in a single day. The asset management company witnessed a staggering $642 million in withdrawals.
These massive outflows have been largely driven by the firm’s high fees, pushing investors and traders to gravitate towards companies offering Spot Bitcoin ETFs with less expensive fees.
With lower fees, Grayscale stands to attract a wider pool of investors, while also catering to the needs of its existing shareholders. The combination of the firm’s robust reputation, impressive track record and a reduced ETF fee holds the promise of mitigating current outflows and potentially sparking renewed inflows.
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