Grayscale's Bitcoin ETF Must Slash Fees Or Lose Share To BlackRock And Fidelity Funds With Competitive Advantages, JPMorgan says

Grayscale’s Bitcoin ETF Must Slash Fees Or Lose Share To BlackRock And Fidelity Funds With Competitive Advantages, JPMorgan says

BySteven Walgenbach

Updated: 08 February 2024

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Grayscale’s Bitcoin ETF must slash its fees or risk losing market share to spot Bitcoin ETFs (exchange-traded funds) managed by BlackRock and Fidelity that also have an edge on two liquidity measures, JPMorgan says.

The Grayscale Bitcoin Trust (GBTC) charges the highest fees among spot Bitcoin ETF issuers even after it reduced its management charge to 1.5% from 2% during its conversion to a spot Bitcoin ETF. BlackRock and Fidelity will charge 0.25% after a waiver period.

Grayscale Bitcoin ETF Outmatched By Competitors’ Liquidity

“An additional reason beyond fees is that the Blackrock and Fidelity ETFs are already commanding an advantage vs GBTC in terms of two liquidity metrics,” JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a Feb. 7 report.

The first metric is JPMorgan’s proxy for market breadth, which is based on the Hui-Heubel ratio. It, according to the analysts, is around four times lower for the BlackRock and Fidelity ETFs. This implies that these two funds display significantly more market breadth than GBTC.

The second metric highlighted by the analysts relates to how much ETF closing prices deviate from their net asset value on average. JPMorgan analysts say this specific metric for the Fidelity and BlackRock ETFs implies both funds recorded significant improvements in their respective liquidity levels. This is in contrast to GBTC’s metrics, which signaled that its liquidity had decreased during the same period.

BlackRock And Fidelity ETFs Surge Into Top 10

Two spot bitcoin ETFs among top 10 of *all* ETF inflows in January…

Never thought I'd see the day.

via @MorningstarInc pic.twitter.com/o7L5CEu5Ef

— Nate Geraci (@NateGeraci) February 3, 2024

The BlackRock and Fidelity ETFs ranked among the top 10 largest ETFs in January after collectively recording $4.8 billion in inflows. BlackRock’s iShares Bitcoin Trust (IBIT) ETF was ranked eighth with around $2.6 billion in net inflows, while Fidelity’s Wise Origin Bitcoin ETF (FBTC) ranked tenth with $2.2 billion in inflows.