The world of bitcoin (BTC) asset management is currently dominated by Grayscale, which runs a $19 billion BTC trust (GBTC). However, this leading position could be in jeopardy after the investment giant Blackrock filed for a spot bitcoin ETF in the U.S., according to a recent research report by Bernstein. Grayscale’s present success stems from earning around $380 million in annualized fees, despite the inefficiencies, illiquidity, and significant discounts the product has been trading at over the past 28 months.
While the U.S. Securities and Exchange Commission (SEC) has approved multiple bitcoin futures ETFs, a spot bitcoin ETF has not yet received the green light, despite the numerous applications. If companies like Blackrock manage to break into the spot ETF market, it could offer an incredibly convenient, complaint, and accessible product for retail and institutional players looking to gain exposure to bitcoin. Analysts, led by Gautam Chhugani, have noted this potential shift in the market.
The recent filing by Blackrock’s iShares unit for the formation of a spot bitcoin ETF has influenced other asset managers, such as Invesco and Wisdom Tree, to apply or reapply for a bitcoin ETF product. Bernstein’s research report highlights that Grayscale’s Bitcoin Trust only represents 3% of the total bitcoin market cap, indicating significant potential for a compliant ETF to grow its share and provide a solution for custody issues in the bitcoin space.
Moreover, with the current GBTC annual fee standing at 2%, there is ample room for improvement in terms of pricing. Traditional asset ETFs are not only more affordable, with fees typically below 0.5%, but also possess greater liquidity and efficiency. A more cost-effective and competitive bitcoin ETF could enhance mainstream adoption and investor confidence in the cryptocurrency.
It is worth noting that CoinDesk, the parent company of Grayscale, is Digital Currency Group (DCG). While Grayscale’s dominance in the bitcoin asset management market has been unrivaled up until now, the possibility of an SEC-approved spot bitcoin ETF could change the landscape significantly.
In conclusion, developments in the bitcoin ETF market could potentially lead to more accessible, cost-effective, and compliant products for retail and institutional investors. While Grayscale’s BTC trust currently leads the market, Blackrock’s filing for a spot bitcoin ETF could pave the way for more innovation and competition in the realm of cryptocurrency investment products. Although the SEC has not yet given the green light for a spot bitcoin ETF, the industry’s anticipation and preparation for this breakthrough could be a game-changer for the wider adoption of digital currencies.
Source: Coindesk
