- Grayscale’s high management fees led investors to flock to other ETF issuers, according to a crypto trader.
- Grayscale reportedly had to sell Bitcoin holdings to pay back investors.
- The initial days of Bitcoin ETF trading saw Grayscale facing a $579 million loss.
Crypto influencer and trader known as Ash Crypto shared his perspective on the reasons behind Grayscale “dumping” Bitcoin.
The trader believes that before the spot Bitcoin exchange-traded fund (ETF) approval, the Grayscale Bitcoin Trust (GBTC) used to redeem its shares by providing investors with equivalent value in USD.
Grayscale did so without selling the Bitcoin holdings, which allowed the investment firm to accumulate a significant amount of Bitcoin, making it one of the largest Bitcoin holders.
According to the crypto trader, investors were withdrawing their money from GBTC for two main reasons, one of which was Grayscale’s high management fees. Grayscale is reportedly charging a 1.5% yearly management fee, which is five to six times the fees charged by other ETF issuers.
Moreover, the second reason is that some investors bought GBTC at a 40% discount, but the percentage has now been reduced to zero, resulting in investors exiting their positions. The two reasons, in Ash Crypto’s opinion, led GBTC to sell its Bitcoin holdings to pay back investors.
In terms of the ETF issuers, data showed that Grayscale lost $579 million in the first two days of trading Bitcoin ETFs, while in general, the overall market drew $1 billion.
Flows for the Bitcoin spot ETFs revealed that BlackRock was behind $508 million of the flow, Fidelity for $442 million, Bitwise for $240 million, and Ark 21Shares for $116 million.
Ash Crypto claimed that a long-term perspective is crucial, as for a few weeks, “Bitcoin can go sideways or even go down.” The crypto trader added that once the price settles, investors will pull their money from GBTC and put it into other ETFs that have a low management fee. He concluded, “Remember, this is a long-term game, and you need to have patience; otherwise, you will lose your BTC to Wall Street.”
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