BlackRock to Surpass Grayscale in Bitcoin ETF Assets Under Management in May

Grayscale is the largest fund manager in the crypto space. BlackRock is the largest fund manager in the world. Both companies are major players in the world of bitcoin ETFs, but Grayscale’s advantage is fading.

Grayscale started with a technical edge, having a type of product that operated like a closed fund for years, and investors could not easily redeem their shares. It established itself as a respected brand, and investors were aware of it.

Now as an ETF, investors can easily redeem shares, and with long-standing high fees, they are doing just that. As a result, BlackRock’s popular iShares Bitcoin Trust (IBIT) is quickly catching up.

A bitcoin ETF is an investment vehicle that allows buyers to gain exposure to digital assets without directly purchasing and storing them. ETFs trade like stocks, and the ease with which small investors can now access bitcoin has led to an influx of billions of dollars into the market in just the last two months.

After a successful launch in January, BlackRock’s IBIT now has $17.7 billion in assets under management. Grayscale’s Bitcoin Trust (GBTC) has $23.7 billion, and in the meantime, it has recorded an outflow of more than $15 billion since the beginning of the year.

GBTC is reducing its bitcoin under management at a staggering rate as bankrupt crypto companies redeem GBTC shares that they had to pay to creditors. The fund is also more expensive compared to other ETFs on the market. Its fee is 1.5 percent, while IBIT’s fee is 0.12 percent for the first 12 months, then it will be set at 0.25 percent.

This fee difference is certainly prompting some investors to switch from GBTC to other products on the market. As a result, IBIT has quickly accumulated a significant amount of bitcoin, while GBTC is losing its share.

Bloomberg Intelligence ETF analyst Eric Balchunas stated that it is inevitable that IBIT will surpass GBTC, and if things remain as they are, this could happen as early as this month.

Data from Arkham Intelligence shows that nearly 26,000 bitcoins have been leaving GBTC on a weekly basis.

On Monday, $302.6 million left the fund, indicating that the outflow is not yet over. These outflows are likely putting pressure on the price of bitcoin. The largest cryptocurrency fell 6 percent last week and more than 11 percent below its new peak of $73,737.

CoinShares research head James Butterfill stated that the fund will continue to experience outflows.

– Given that they have lost $15 billion in assets under management this year, a large portion of which is going to competitors, they have one of two choices: reduce the fee or maintain high fees and accept ongoing losses – said Butterfill, who believes that IBIT will surpass GBTC by May.

However, despite GBTC surpassing IBIT in terms of assets under management, Grayscale’s fund will likely continue to perform well, Balchunas said.

– The good thing about Grayscale is that there is a bull market that compensates for the outflows – he said, adding that GBTC will continue to perform well thanks to its loyal base.