- BlackRock’s spot Bitcoin ETF application could affect Grayscale’s operations
- Analyst highlights the need for Grayscale’s GBTC to adapt to changing competition
- If approved, BlackRock’s ETF could offer better liquidity and lower fees than GBTC
Analyst James Seyffart suggests that BlackRock’s spot Bitcoin exchange-traded fund (ETF) could put pressure on Grayscale’s similar product, the Grayscale Bitcoin Trust (GBTC). In a recent publication, Seyffart, a Bloomberg Intelligence analyst, discusses the potential consequences of BlackRock’s ETF application on Grayscale’s operations.
Changing Competition Landscape
Seyffart emphasizes that BlackRock’s ETF application, as the world’s largest asset manager, could change the competitive landscape. He suggests that Grayscale’s GBTC investment vehicle needs to adapt to the new playing field. One of Seyffart’s main arguments is that while GBTC operates as an over-the-counter (OTC) product, its competitors offer approved spot ETFs.
Challenges for GBTC
The analyst points out that Grayscale’s Bitcoin OTC product is not an ETF traded on a national securities exchange. He highlights the existing negative implications of this situation, including occasional significant price differences between GBTC and Bitcoin on the OTC market. Seyffart also mentions that investors in this product may incur higher transaction fees in many cases.
Potential Impact of BlackRock’s ETF
If BlackRock’s ETF application is approved by the U.S. Securities and Exchange Commission (SEC), the product would have better liquidity, lower fees, and a more proportional impact on Bitcoin’s price. In this scenario, for Grayscale to survive against its competitors, it would need to either obtain spot ETF approval from the SEC or reduce its service costs.
While the current outlook for GBTC’s future seems pessimistic, applications made by BlackRock, WisdomTree, and Invesco have had a positive impact on GBTC. According to recent data, the volume and price of the GBTC fund have significantly increased following BlackRock’s ETF application.
