The Tale of Grayscale Bitcoin Trust: More Bucks Than Other BTC ETFs Combined
Grayscale's GBTC Leading the Charge in Bitcoin ETFs - Insights Explained
By Jacob Thomas
(FYI, this article discusses investment-related topics and might contain some mature language.)
Grayscale's GBTC Bitcoin ETF has been raking in the dough, generating more annual revenue than all other U.S. spot BTC ETFs put together. That's right - more cash in '22 than the rest of the BTC-focused ETFs combodamnit!
Nate Geraci, a savvy ETF analyst from ETF Store, dropped a bombshell on Twitter, stating that GBTC had an implied revenue of $268M compared to $211M from the combined collections of the other 11 ETFs. Yikes!
"Almost 16 months post-launch, GBTC's still ringing the cash register louder than the rest combined, and it ain't even close," Geraci wrote. Damn straight!
But here's the kicker: GBTC's bitcoin holdings have taken a beating, falling almost 70% since the ETF conversion in January 2024. From about 619K BTC to 191K BTC; that's a big drop, mate!
So, what's the secret sauce behind GBTC's earnings supremacy? Well, it ain't necessarily the taste of those high fees. You see, GBTC charges a hefty 1.5%, compared to the average 0.15%-0.94% of other ETFs. Yet, it still managed to outshine 'em all.
But hey, before you jump to conclusions, remember that GBTC's fee is considered “average” in the traditional ETF world, according to Bloomberg ETF analyst Eric Balchunas. Fair enough.
Many experts attribute this revenue surge to a couple of reasons:
- Captive Investors: Old investors stuck in GBTC, unwilling or unable to switch to cheaper alternatives because of the heavy tax implications.
- High Fees: Those high ass fees! Despite the tax issues, some newbies might have been lured in by GBTC's earnings firepower.
But with the anticipated approval of in-kind redemption for ETFs, will GBTC's moat dry up? Some experts reckon that using BTC instead of cash for redemptions could lower the tax burden, making it less burdensome for big-time investors. But individual folks sitting on massive unrealized gains will still need to bear the capital gains tax.
So what's the score, you ask? GBTC slides into third place in the AUM race with $17.8B. BlackRock's iShares BTC ETF sunrules the scene with $54.8B, followed by Fidelity's FBTC with $18B.
With the slump in Q1 2025, spot BTC ETFs saw a resurgence in April, reeling in a staggering $3B in inflows. And that helped BTC's recovery to $94k, a 26% jump from the year's low of $74.5k. In the short term, the $92K range low support and $100K overhead mid-range resistance are crucial levels to keep tabs on.
[Bonus!]
- GBTC's Former Dominance: Some Insights
Grayscale's GBTC was once the king of the U.S. Bitcoin investment market, thanks to factors like the first-mover advantage, institutional credibility, and market recognition. However, the competition is heating up with newer spot Bitcoin ETFs offering lower fees, challenging GBTC's dominance.
[Sources]1. Coinglass2. X3. Bloomberg4. Eric Balchunas, Bloomberg ETF Analyst
- Despite the decline in Bitcoin holdings, Grayscale's GBTC Bitcoin ETF continues to generate more annual revenue than all other U.S. spot Bitcoin ETFs combined, as highlighted in the article by Jacob Thomas.
- Nate Geraci, an ETF analyst from ETF Store, tweeted that GBTC had an implied revenue of $268M compared to $211M from the combined collections of the other 11 ETFs, suggesting that GBTC's supremacy in earnings comes not only from its captive investors but also from the high fees it charges.
- Eric Balchunas, a Bloomberg ETF analyst, considers GBTC's fee as "average" in the traditional ETF world, yet it still manages to outshine its competitors in terms of revenue.
- Many experts attribute GBTC's revenue surge to the unwillingness or inability of old investors to switch to cheaper alternatives due to tax implications and the lure of GBTC's earnings firepower for some newbies.
- As more spot Bitcoin ETFs offering lower fees enter the market, the anticipated approval of in-kind redemption for ETFs could potentially lower the tax burden and impact GBTC's revenue. However, individual investors with massive unrealized gains will still need to bear the capital gains tax.
