GBTC loses its crown as the largest Bitcoin ETF: will Grayscale pivot?

Earlier this year, I covered the Grayscale Bitcoin Trust ETF (NYSEARCA:GBTC) as well as other Bitcoin ETFs. Back then, the GBTC ETF was the largest Bitcoin ETF by Asset Under Management (AUM)

Earlier this year, I covered the Grayscale Bitcoin Trust ETF (NYSEARCA:GBTC) as well as other Bitcoin ETFs. Back then, the GBTC ETF was the largest Bitcoin ETF by Asset Under Management (AUM), despite its uncompetitive 1.50% expense ratio, more than 5 times higher than competition.

The situation in terms of AUM has changed since April, and significant outflows from the Grayscale Bitcoin ETF (worth around 20% of the fund) have made GBTC lose its crown in favor of the iShares Bitcoin Trust ETF (IBIT). Grayscale’s GBTC ETF is still the second-largest Bitcoin fund at the time of writing, and now competes with Fidelity Wise Origin Bitcoin Fund ETF (FBTC) for the third place on the podium by AUM.

Prior to its conversion to an ETF in 2024, the Grayscale Bitcoin Trust was launched in 2013 and represented one of the first publicly listed products that investors could use to get exposed to Bitcoin (BTC-USD). At the time, a 1.50% expense ratio was justified, in my view, given the lack of competition and how exotic Bitcoin was as an asset class. Nowadays, investors who have held GBTC when it was trading at a discount against its Bitcoin holdings have better options to cash out and/or hold onto their Bitcoin.

Given its history, I am still keeping an eye on GBTC to see whether Grayscale will pivot by lowering its fees to make the fund more competitive. I expect Grayscale to seriously consider this pivot, given how radically the market for Bitcoin financial products has changed since 2013. Three Bitcoin ETFs have already lowered their expense ratio since their launch earlier this year - something I will cover in the next section.

However, at this point in time my recommendation concerning the GBTC ETF remains that of last time I covered this fund: I see no reason to invest in Bitcoin via GBTC, due to its very uncompetitive expense ratio. Investors who have it in their portfolio may opt to hold for a few more months, to see whether Grayscale will indeed review its expense ratio to promote the fund.