Bytetree Founder Believes Grayscale Should Lower Its ‘Unrealistically High’ Fee: Warns of Possible ‘Systemic Risk’

Mar 21, 2021 | Bitcoin News | 0 comments


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.”

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.

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:

The trouble is, there is nothing in place to prevent the discount from widening further. Grayscale has announced a $250m share purchase, which is great, but it is too small to make a difference within a $33 bn fund. To be taken seriously, they need to pledge to buy back that quantity each week.

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.”

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

News Source from

Related Articles

Mapping out Genesis Block Ventures’ portfolio

Mapping out Genesis Block Ventures’ portfolio

Quick Take Based in Hong Kong, Genesis Block was founded in 2017 by Wincent Hung and Clement Lp. Aside from operating a proprietary trading desk and offering market making, the firm formed Genesis Block Ventures (GBV), a separate entity that provides investment to the...

Standard Custody takes new route to ‘qualified custodian’ status

Standard Custody takes new route to ‘qualified custodian’ status

Standard Custody received its license to operate as a New York state-chartered trust on May 4, and it's already making a play to gate-crash the institutional custody space. Just days after its licensing, the firm announced the close of a $53 million Series B round for...

Elon Musk tweets BTC price bottom? 5 things to watch in Bitcoin this week

Elon Musk tweets BTC price bottom? 5 things to watch in Bitcoin this week

It's all about Elon as Twitter provides the backdrop to an ongoing battle between hodlers and the "Dogefather." Bitcoin (BTC) is nearing $40,000 this week as “Dogefather” Elon Musk deals out pure pain to hodlers — what’s next?After a traumatic weekend for many crypto...

Pin It on Pinterest

Share This