GBTC Remains a Cash Cow for Grayscale

It may have lost two-thirds of its assets under management since converting into an exchange-traded fund, but the Grayscale Bitcoin Trust ETF is still a cash cow for asset manager Grayscale.

With most of its competitors charging fees of 0.25% or less, the Grayscale Bitcoin Trust ETF continues to levy a hefty 1.5%.

As a result, GBTC is bringing in more annual revenue than all other spot Bitcoin ETFs combined, said Nate Geraci, president of the ETF Store, in an X post.

That’s “nearly 16 months after other spot ETFs launched” in January 2024, he said. “And it’s not even close.”

Looking at assets under management (AUM) and fee rates, Geraci concluded that the 11 other ETFs have implied annual fees of $211.9 million combined.

Grayscale makes $268.5 million by itself – almost double the annual revenue of BlackRock’s iShares Bitcoin Trust (IBIT), which has $54.8 billion under management, more than triple GBTC’s $17.9 billion.

GBTC remains the third-largest Bitcoin ETF by AUM, after IBIT and the Fidelity Wise Origin Bitcoin Fund.

According to BiTBO’s Bitcoin Treasuries website, Grayscale had about 617,000 BTC when ETFs were approved in January 2024. Today, it has about 191,200.

Why is GBTC so popular?

The reason for Grayscale’s popularity is fairly easy to discern: Inertia.

Before it was an ETF, the Grayscale Bitcoin Trust was a closed-end fund that bought and held Bitcoin, and then sold shares. That makes it a precursor to Michael Saylor’s Strategy — which now holds 553,555 BTC worth $51.9 billion at the current price of $93,647.

There were some differences. Private placement investors had to lock their funds into the Grayscale Bitcoin Trust for at least six to 12 months before selling their shares, although they were available on the public markets as GBTC. The lock-ups ended when it converted to a spot ETF.

It seems like a fair assumption that GBTC holders paying much higher fees than they have to aren’t paying attention.

Especially considering Grayscale has a second ETF, the Grayscale Bitcoin Mini Trust, with an AUM of $3.9 billion, that charges just 0.15% annually— a tenth of its bigger brother’s fees.