Even bitcoin has room for VIPs

Ahe of curve. Bitcoin’s latest celebration is being ruined by party poopers. Even as cryptocurrency surged to an all-time high of almost $74,000, amount of assets in oldest and largest related U.S. fund keeps tumbling. It’s an understandable flight to new lower-fee options, but re’s good reason for some investors to stick with a premium product.

Grayscale Bitcoin Trust has been around since 2013, crown jewel of cryptocurrency billionaire Barry Silbert’s Digital Currency Group. Grayscale spearheed cruse to win approval from U.S. regulators to open exchange-tred funds tracking digital assets. It won permission to convert trust to an ETF in January, while or money managers, such as BlackRock, have started rivals.

Grayscale slashed GBTC’s 2% fee by a quarter, but its 10 competitors all charge less than 1%, according to ir websites. discounts have helped deplete Grayscale’s coffers by $10 billion. Boss Michael Sonnenshein on Tuesday pledged to eventually cut fees furr. In just two months, trust has now lost more than $3 billion that it took a dece to accumulate, a figure that would have been far worse h Bitcoin’s value not soared.

Grayscale has benefitted from being early, however. Its nearly $25 billion in assets makes it largest U.S. spot bitcoin ETF by a wide margin, and for now at least, tallies almost as much as $31 billion in or 10 funds combined, according to Monday’s data from cryptocurrency index provider CF Benchmarks.

plan unveiled last week to spin out some Grayscale shares into an almost-identical ETF will allow holders to shift some of ir investment without paying any capital gains tax. This should help slow or stop rapid outflows.

Bigger investors might yet stick with Grayscale, too. Its size vantage, in ory, makes it easier for fast-paced trers such as Jane Street and Virtu Financial to find counterparties willing to buy or sell at a given price. As with or investment choices that regularly introduce lowest-cost services, y aren’t always right for everyone. State Street’s flagship ETF tracking gold, for example, is eight times larger than its cheaper substitute, according to ETF.com.

Much will depend on bitcoin’s price. A sharp tumble probably would accelerate Grayscale exodus. And yet trust first grew beyond $1 billion in October 2017, when each bitcoin was worth around 10% of where it tres now. Even in wild world of crypto, re’s a room for VIPs.