Bitcoin’s lone US investment trust is feeling the burn as investors reconsider hefty fund fees and its underlying cryptocurrency fails to buck this year’s downward trend.
Grayscale Bitcoin Investment Trust, or GBTC, which tracks bitcoin’s market price, has seen its net asset value hit its lowest point since the cryptocurrency’s price surged late last year. Shares of GBTC are down around 80 per cent since bitcoin hit a high of $19,511 in mid-December. The price of bitcoin has dropped nearly 66 per cent during the same period, making the premium to the cryptocurrency almost non-existent. The fund has traded at more than twice its net asset value.
A spokesman for Grayscale declined to comment.
Some investors correlate GBTC’s downward trend with its expense fees. The trust charges $20 for every $1,000 invested, or two per cent. For comparison, the average equity mutual fund expense ratio was around 0.59 per cent in 2017, according to the Investment Company Institute.
"Expense ratios are insane for these funds and the current bitcoin price is creating more problems," said Naeem Aslam, the London-based chief market analyst at TF Global Markets UK Ltd., via email.
Bitcoin has recently hit a snag with regulators. The Securities and Exchange Commission dismissed requests over the summer to list cryptocurrency exchange-traded funds and cited concerns about manipulation and market surveillance.
Grayscale Investments Inc., which runs GBTC and has $1.5 billion in assets under management, is one of the world’s largest digital currency asset managers.