On January 20, Bitcoin OG Samson Mow, a prominent figure in the cryptocurrency space and the CEO of Jan3, expressed his concerns on social media platform X regarding the high fees (1.5%) charged by Grayscale Bitcoin Trust (GBTC).

Jan3 is a company dedicated to advancing the global adoption and integration of Bitcoin. They specialize in providing technologies and solutions for individuals, enterprises, and nation-states to adapt to an economy increasingly influenced by Bitcoin.

Their focus includes developing Bitcoin infrastructure, advising nations on Bitcoin strategies, and creating financial products for the emerging Bitcoin-centric economy. Jan3 emphasizes the concept of ‘Hyperbitcoinization’, a transition toward a Bitcoin Standard, and offers services ranging from wallet development to mining operations.

Mow observed that despite GBTC’s significant lead in the market, their reluctance to lower fees could be diminishing their advantage. He noted this as a real-time example of market dynamics, emphasizing the market’s unfavorable response to higher fees.

I mean you can say you’re worth it (higher fees) but the market sure doesn’t think so.

— Samson Mow (@Excellion) January 20, 2024

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This commentary comes in the wake of the January 11 launch of eleven SEC-approved spot Bitcoin Exchange-Traded Funds (ETFs), including one from Grayscale Investment.

On Jan. 10, the U.S. SEC approved 11 #BitcoinETFs, with 10 starting trading the next day. To compete, many issuers reduced fees to 0.2%-0.4% and offered temporary waivers.

However, Grayscale, the largest #Bitcoin holder, charges up to 1.5% without waivers. pic.twitter.com/x0Q6APfCPx

— Cointelegraph (@Cointelegraph) January 19, 2024

Contrary to expectations from many Bitcoin enthusiasts, including Mow, the price of Bitcoin has not seen an increase post-launch.

“Dean Crypto Trades,” a popular pseudonyms crypto analyst provided insights into this situation, highlighting several key aspects:GBTC’s Holdings:

• GBTC currently holds approximately 582,000 BTC, equating to over $23 billion in value.
• Potential Investor Actions: Investors might sell off their GBTC holdings for various reasons: (a) Profiting from the past year’s GBTC discount trade, as GBTC was trading at a 50% discount from its Net Asset Value (NAV); and (b) Shifting to more cost-effective products or ETFs, given GBTC’s 1.5% annual fee.
• Market Absorption: Despite a decline in Bitcoin’s price, the new ETFs have been absorbing a considerable portion of the outflows from GBTC.
• Continued Supply Overhang: As long as GBTC experiences outflows, a supply overhang is likely to persist in the market.
• ETH Holdings and Market Impact: Grayscale also holds about 3 million Ethereum (ETH) in their Ethereum Trust (ETHE), valued at approximately $7.4 billion. The analyst speculated that similar market dynamics could unfold if an ETH spot ETF is approved and Grayscale converts their ETHE fund similarly to the GBTC situation.
• Uncertain Market Future: The exact duration and overall market impact of these developments remain uncertain and challenging to track in real-time, especially given the delayed reporting of ETF data.

To clear up common questions regarding Grayscale and $GBTC.

1. Yes, $GBTC still holds ~582K BTC or $23B+ in value.

2. Yes, a lot of this will likely be sold by investors:
A. Taking profit from the GBTC discount trade from the past year as there was a 50% discount from GBTC to… pic.twitter.com/C7uZqIyk7B

— Daan Crypto Trades (@DaanCrypto) January 19, 2024

Another crypto analyst blaming Bitcoin’s price drop on outflows from Grayscale’s spot Bitcoin ETF was Scott Melker:

Grayscale is not actively “dumping on the market.”

People are selling GBTC which means grayscale has to sell the equivalent amount of bitcoin.

It’s not nefarious. It’s simply the mechanics of an ETF.

— The Wolf Of All Streets (@scottmelker) January 18, 2024

At the time of writing, Bitcoin is trading at $41,469 down 0.1% in the past 24-hour period.

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• Source: https://www.cryptoglobe.com/latest/2024/01/jan3-ceo-questions-grayscales-fee-strategy-as-bleeding-from-its-spot-bitcoin-etf-gbtc-continuous-hurting-bitcoin/