GBTC Continues to Shed Assets 7 Months After ETF Conversion

The pace of the bleeding may have slowed, but investors are still taking money out of the Grayscale Bitcoin Trust (GBTC), more than seven months after Grayscale converted the fund into an ETF. 

Over the past week, approximately $200 million has left the fund, while over the past month, outflows have totaled $935 million. 

The outflows combined with recent price declines have shrunk GBTC’s total assets under management to $13.1 billion, its lowest AUM since March 2023, when bitcoin was trading a little above $20,000, according to crypto data provider CoinMarketCat. 

GBTC has lost its ranking as the No.1 spot bitcoin ETF to the $20 billion iShares Bitcoin Trust (IBIT), and it’s conceivable that it could eventually even fall behind the current No. 3 spot bitcoin ETF, the $10 billion Fidelity Wise Origin Bitcoin Fund (FBTC). Those three funds and eight others received Securities and Exchange Commission greenlights to begin trading earlier this year, ending issuers nearly decade-long quest for approval. 

Unlike GBTC, IBIT has received inflows over the past week (about $60 million) and past month (roughly $2 billion), according to Bloomberg data. Flows for FBTC have been more mixed—inflows of $1 million over the past week and outflows of $12 million over the past month—but still better than GBTC.

The relentless outflows from GBTC relative to other spot bitcoin ETFs suggest that investors remain unhappy with its hefty fee.

GBTC Fee the Highest Among Spot Bitcoin Funds

At 1.5%, GBTC’s expense ratio is far and away the highest in the category—nearly 60 basis points more than the next-costliest fund, Hashdex Bitcoin ETF (DEFI)— and several times as expensive at IBIT, FBTC, and other large spot bitcoin ETFs, most of which charge between 20 and 25 basis points. 

GBTC’s expense ratio is also 10 times that of the least least-costliest fund, the Grayscale Bitcoin Mini Trust (BTC), another spot bitcoin ETF backed by Grayscale that debuted at the end of July.

In an investor-friendly move, investors in GBTC had 10% of their positions swapped into BTC, dramatically lowering the expense ratio for a portion of their holdings.  

On the other hand, that still left 90% of their positions in the much more expensive GBTC. While anyone can sell the trust and purchase BTC or any of the other cheaper spot bitcoin ETFs, investors who are sitting on large unrealized capital gains may be reluctant to do so for the potential tax implications and the desire to avoid realizing those gains.