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Home BUSINESS

Grayscale Dumped 20,000 Bitcoin and Here is Why

Michael Juanico by Michael Juanico
January 25, 2024
in BUSINESS, CRYPTO, FINANCE
Reading Time: 3 mins read
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  • Grayscale has seen ongoing daily outflows of Bitcoin from its trust shortly before US market open, likely due to its high fees compared to competitors like BlackRock.
  • Despite the outflows, Grayscale’s revenues remain significantly higher than competitors at around $381 million annually due to its high 2.5% fee.
  • With such high revenue, Grayscale has little incentive to lower its fees to stem outflows, though this means it will continue to see elevated outflows versus competitors.

Grayscale‘s Bitcoin trust has seen daily outflows of Bitcoin shortly before the US market opens each day since converting to a spot ETF. The outflows are likely due to Grayscale’s high fees compared to competitors.

ICYMI: Grayscale’s $GBTC sent ~$800M worth of #Bitcoin to Coinbase at todays open pic.twitter.com/P0qy48oncr

— BlockNews.com (@blocknewsdotcom) January 22, 2024

Data Shows Ongoing Outflows

According to data from Arkham Intelligence, Grayscale has continued its pattern of daily Bitcoin outflows from its trust. The outflows occur each day shortly before the US market opens.

Grayscale charges a fee of 2.5%, far higher than competitors like BlackRock which charge around 0.25%. This provides an incentive for investors to leave Grayscale seeking lower fees or to lock in profits from Bitcoin’s appreciation.

Despite Outflows, Revenues Remain High

While seeing continual outflows, Grayscale’s revenues remain significantly higher than competitors due to its high fees. Grayscale generates around $381 million in revenue annually from its Bitcoin trust.

Even if Bitcoin holdings fell to 95,000 BTC, Grayscale would still generate over $60 million in fees annually. This is far above competitors like BlackRock which generates around $3 million in revenue from its Bitcoin ETF.

Little Incentive to Lower Fees

With such high revenue generation compared to competitors, Grayscale has little motivation to lower its fees to stem outflows. It appears comfortable maintaining high fees despite the outflows.

Grayscale’s elevated returns versus competitors will persist due to the large fee discrepancy. Lowering fees at this point would drastically cut into Grayscale’s revenues.

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
Tags: BitcoinBitcoin ETFcryptoGBTCgrayscale
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Michael Juanico

Michael Juanico

Michael is a BSBA Management graduate from Mindanao State University and has been a professional content writer since 2019. He began exploring cryptocurrency in 2021 and has since made blockchain and digital assets his primary focus. For nearly four years, Michael has contributed research and editorial content at Aiur Labs and BlockNews, producing clear and accessible coverage of market trends, trading strategies, and project developments. He is transparent about his personal holdings in Bitcoin, TRON, and select meme tokens, combining writing expertise with hands-on market experience to deliver trustworthy insights to readers.

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