AUM, bitcoin etf, BTC exposure, bytetree, capital gains tax, GBTC, GBTC premium, Grayscale Investment Trust, management fee

The founder of Bytetree Asset Management, Charlie Morris, has suggested the reduction of the GBTC management fee as one way Grayscale Investment can ease the current selling pressure and possibly reduce the discount on the shares. Morris says if no action is taken, “the selling pressure will build†and “could morph into a systemic risk.â€

Recent GBTC Buyback Insignificant

On the other hand, Morris, who is also the chief investments officer (CIO) at Bytetree, thinks Grayscale’s recent $250 million GBTC may be too insignificant to make a difference. However, in his Bytetree Market Health Update, Morris does acknowledge that 2020 was a year of “record inflows†for Grayscale Investment. During this period, the premium on GBTC shares averaged 30% while the value of assets under management (AUM) soared to over $30 billion.

AUM, bitcoin etf, BTC exposure, bytetree, capital gains tax, GBTC, GBTC premium, Grayscale Investment Trust, management fee

However, when the premium began to ease, the inflows into the trust similarly began to slow down. This subsequently led to the premium on the GBTC shares turning into a discount. Yet as Morris explains, this discount might still widen as the supply of GBTC shares continues to outstrip the demand for the same. In his analysis, Morris said:

Threat From Competitors

Still, as Morris notes, Grayscale Investments may not be in a position to buy-back more GBTC shares due to “their legal structure (which) prevents this.†Similarly, the CIO says he is “not entirely sure of the benefits†of Grayscale’s plan “to launch an ETF that invests in GBTC in a feeder structure of sorts.†The CIO goes on to explain:

“When Osprey (OBTC) offers Bitcoin exposure at 0.49% per annum, you might think GBTC would drop their fees down from 2%; they are unrealistically high given the new world of competition.†While Morris touts ETFs as a better alternative, he, however, acknowledges that the only reason investors will/may stay in GBTC is capital gains taxes.

Meanwhile, Morris concludes his report by saying he “very much hopes they (Grayscale) restore investor confidence without delay.â€

Do you agree that lowering fees will help Grayscale’s cause? You can share your views in the comments section below.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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