Grayscale's Bitcoin Trust Sees 50% Asset Decline Amid ETF Transition, Yet Earns Five Times More Than BlackRock's iShares Bitcoin Trust

Grayscale's Bitcoin Trust (GBTC) has seen its assets drop by 50%. This decline is due to significant outflows since it became an exchange-traded fund (ETF). Despite this, Grayscale is still earning five times more than BlackRock's iShares Bitcoin Trust (IBIT), according to CoinDesk.

How is that possible? It's all about the fees. GBTC has an expense ratio of 1.50%. In contrast, IBIT has a much lower ratio of 0.25%. This difference in fees makes a big impact on their earnings.

Even with investors moving to cheaper options, Grayscale's Bitcoin ETF continues to generate higher income. GBTC currently manages nearly $14 billion in assets and earns about $205 million each year. Meanwhile, IBIT, which manages around $17 billion, brings in just $42.5 million.

The competition among fund operators was fierce before trading began on January 11. Many funds set their expense ratios below 0.40% to attract customers. GBTC, having transitioned from a trust to an ETF, only reduced its ratio by half a percentage point to 1.5%. That's still quite a bit higher than others.

For instance, the Bitwise Bitcoin ETF (BITB) has the lowest expense ratio at 0.20%. The Ark 21 Shares Bitcoin ETF (ARKB) is at 0.21%. Both IBIT and the Fidelity Wise Origin Bitcoin Fund (FBTC) have set their ratios at 0.25%.

Even though some investors are withdrawing funds to find platforms with lower fees, GBTC's early start means it still sees some cash flow. Back in January, it reported assets under management of $29 billion, according to YCharts. At that time, it held about 600,000 bitcoins.

Now, GBTC's assets have decreased to $13.65 billion. This figure comes from multiplying the net asset value (NAV) per share of $49.12 by the 278 million shares outstanding. Currently, it holds around 220,000 bitcoins. On the other hand, IBIT manages 366,000 bitcoins, has 642 million shares outstanding, and a NAV per share of $35.13, which gives it $17 billion in assets.

As of now, neither Grayscale nor BlackRock has responded to inquiries sent before U.S. business hours.