2 theories why #gbtc sticks to high fees despite bleeding billions
Grayscale's #BitcoinETF has experienced substantial outflows exceeding $14 billion despite maintaining its high fees, which are significantly above the industry average. Former Wall Street analyst Jim Bianco provided insights into Grayscale's strategy, suggesting that the high fees may discourage holders from selling, especially if they anticipate Bitcoin's continued price growth.
Bianco speculated that #grayscale might have analyzed the tax implications for GBTC holders, concluding that many are "stuck" due to the high exit costs. With assets nearing $24.7 billion, Grayscale may be betting on holders staying invested, expecting significant Bitcoin price gains in the future.
However, Bianco cautioned that if Bitcoin's price were to decline, Grayscale's strategy might backfire, leading to increased selling pressure and potential exits despite tax implications.
Bloomberg ETF analyst Eric Balchunas echoed Bianco's views, suggesting a gradual decline in GBTC assets. Yet, if Bitcoin's price rises, Grayscale's revenue could stay stable.
Grayscale's decision to maintain high fees post-winning a lawsuit against the SEC to convert GBTC to an ETF raises questions. Balchunas suggested that Grayscale might have underestimated U.S. ETF market competitiveness and fee competition impacts.
Another possible motive, proposed by Bloomberg's James Seyffart, involves Grayscale's relationship with crypto lender Genesis, a DCG subsidiary. Genesis's significant GBTC share holdings collateralize loans for Gemini Earn users. Grayscale's actions may address Genesis's financial challenges.
In summary, Grayscale's decision to keep high fees for its Bitcoin ETF may stem from various factors, including confidence in Bitcoin's future price, investor retention efforts, and considerations related to Genesis. However, the strategy's effectiveness remains uncertain amid evolving market dynamics and regulatory scrutiny.
Source - cointelegraph.com
#CryptoNews🔒📰🚫 #BinanceSquareBTC