Bitcoin (BTC) investors should prepare for the possibility of price stagnation or even a decline as the impending liquidation of $25 billion worth of Grayscale Bitcoin Trust (GBTC) hangs over the market.
Chris J. Terry, a founding partner at BTCdata Corporation, has expressed his concerns regarding the potential impact of the substantial GBTC sell-off on the cryptocurrency’s price.
In a recent post on X (formerly Twitter), he remarked, “It appears that the BTC price will remain flat or decline until GBTC is fully liquidated, which involves selling $25 billion worth of assets over the next few weeks.”
Furthermore, Terry criticized Grayscale’s decision to maintain ETF fees at 1.5%, labeling it as one of the most significant strategic errors in crypto history and attributing it to greed.
Mike Novogratz Believes Investors Will Turn to Other Funds
Mike Novogratz, the founder of Galaxy Digital, has offered a different perspective in response to Chris J. Terry’s analysis. Novogratz disagrees with the notion that the liquidation of GBTC will inevitably lead to price stagnation or decline.
Novogratz argues that while some investors may choose to sell their GBTC holdings, many will opt to transition them into other exchange-traded funds (ETFs). He specifically mentioned his preference for Invesco’s BTCO ETF, which boasts a lower annual fee of 0.39%, equating to $39 on a $10,000 investment.
Furthermore, Novogratz highlights the broader implications of the GBTC liquidation. He emphasizes that it will now become easier for traditional investors, particularly baby boomers, to enter the cryptocurrency market. Additionally, he points out the potential for increased leverage when gaining exposure to Bitcoin, with the possibility of 4x or 5x leverage.
Novogratz maintains an optimistic outlook for Bitcoin’s future, suggesting that the current market turbulence will eventually subside. He predicts that Bitcoin’s price will rise in the coming months, despite the impending GBTC sell-off.
Lower-Fee Bitcoin ETFs to Attract More Inflows
Aurelie Barthere, a Principal Research Analyst at Nansen, shared her insights in a recent interview with Cryptonews.com, emphasizing her expectation that lower-fee ETFs will attract more inflows in the near term.
Barthere points out the distinction between ETFs and futures, noting that futures will likely remain the preferred choice for trading and hedging, while ETFs will serve as a retail-oriented instrument, akin to their role in traditional finance.
In terms of the competitive landscape among Bitcoin spot ETF providers, Barthere identifies key factors that will shape their success, including reputation, size, existing market presence, and management fees. She anticipates that providers with strong reputations, larger market presence, and competitive management fees will likely emerge as leaders in the market.
JPMorgan analysts share a similar perspective, predicting that the newly created ETFs’ success will be heavily influenced by factors such as fees and liquidity. This underscores the importance of cost-efficiency and accessibility in attracting investors to these investment vehicles.
Due to the substantial 1.5% fees associated with GBTC, analysts expect a significant exodus of funds from this Bitcoin trust.
Moreover, speculative investors who had acquired discounted GBTC shares on the secondary market in the past year, with the expectation of eliminating the discount to Net Asset Value (NAV) upon conversion, are likely to further contribute to the liquidation of GBTC.
As a result, there could be an approximate $3 billion exiting GBTC and flowing into the newly launched ETFs.
Analysts anticipate that even more substantial outflows, ranging from $5 billion to $10 billion, could occur if GBTC fails to reduce its fees to the 0.25% level set by issuers like BlackRock. Lower fees have become a critical factor in the decision-making process for many investors, which could prompt a significant shift in assets if GBTC doesn’t align with competitive pricing.
