From Cointelegraph

May 2, 2025 1:00:00 pm:

Grayscale Bitcoin Trust (GBTC) has a storied history as a pioneer in regulated Bitcoin investment, transitioning into a spot Bitcoin ETF in 2024. Despite losing over half its holdings with $18 billion in outflows, GBTC generated $268.5 million in annual revenue, surpassing all other US spot Bitcoin ETFs combined.

GBTC’s dominance is fueled by its 1.5% expense ratio, generating more revenue than all other US spot Bitcoin ETFs with a combined $211.8 million. Despite $21 billion in outflows since January 2024, GBTC’s high fees on a substantial asset base continue to drive revenue.

Grayscale’s legacy, fierce loyalty from investors, and significant tax frictions contribute to its revenue supremacy. With institutional and accredited investors forming a strong bond with GBTC, the substantial unrealized capital gains for early investors make sales costly due to tax considerations.

The launch of the Grayscale Bitcoin Mini Trust (BTC) in 2025 with a 0.15% fee targets cost-conscious investors. Despite drawing $168.9 million in inflows, the Mini Trust’s lower revenue per dollar of AUM pale beside GBTC’s $268.5 million annually, reinforcing the latter’s dominance.

GBTC’s dual strategy of high-fee GBTC for revenue and low-fee Mini Trust for retention showcases a nuanced defense mechanism, securing its revenue crown for now. Despite criticisms of its 1.5% fee post-conversion, GBTC remains a formidable force in the spot Bitcoin ETF market. Investors selling GBTC shares for lower-fee ETFs like IBIT or FBTC face potential tax bills of $5,850 to $7,800. However, holding GBTC in tax-advantaged accounts can defer or avoid gains altogether. Psychological factors like loss aversion and brand loyalty deter many from switching, despite NAV discount closure and outflows due to arbitrageurs.

Grayscale’s custodianship via Coinbase secures $18.08 billion in AUM. While newer ETFs draw capital with lower fees, GBTC remains attractive to legacy investors due to its history and regulatory pedigree. Former CEO believes outflows are stabilizing, indicating core holder retention. GBTC’s shield against competition lies in tax barriers and investor trust.

A historical timeline graphic highlights GBTC milestones from launch in 2013 to ETF conversion in 2024, overlaid with Bitcoin price spikes and AUM growth. Source: Dr. Michael Tabone. Source: cointelegraph.com/magazine/bitcoinos-starknet-adding-smart-contracts-bitcoin-zk-proofs.

Read more at Cointelegraph.com

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