Grayscale is the biggest fund manager within the crypto space. BlackRock is the biggest fund manager in the world, full stop. Both are huge players in offering Bitcoin spot exchange-traded funds (ETF), but Grayscale’s head start is fading.

Grayscale started with a technical advantage: it had a type of product that operated for years like a closed-end fund, and investors couldn’t redeem their shares easily but it was a respected brand. Investors knew about it. 

Now as an ETF, investors can redeem shares easily—and with its long standing high fees, they’re doing just that. 

As a result, BlackRock’s super-popular iShares Bitcoin Trust (IBIT) is fast catching up.

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A Bitcoin ETF is an investment vehicle that allows buyers to gain exposure to the digital asset without buying and storing it directly. ETFs trade like stocks, and the ease with which retail investors can now access Bitcoin—no messy crypto wallets or exchanges necessary—has led to billions entering the market in just the last two months.

After a successful launch in January, BlackRock's IBIT now has $17.7 billion in assets under management. Grayscale’s Bitcoin Trust (GBTC) has $23.7 billion, meanwhile, having bled more than $15 billion since its conversion at the start of the year. 

GBTC is offloading its Bitcoin at a rocket speed as bankrupt crypto companies shift GBTC shares they had to pay back creditors. The fund is also more expensive compared to other ETFs on the market: its fee stands at 1.5%; IBIT is priced at 0.12% for the first 12 months and then will be set at 0.25%. 

This is leading some investors to move from GBTC to other products on the market, experts have previously told Decrypt

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As a result, IBIT has quickly gained a lot of Bitcoin while GBTC is losing theirs. 

ETF analyst at Bloomberg Intelligence Eric Balchunas told Decrypt that it’s “inevitable” that IBIT will overtake GBTC—and if things keep up the way they are, it could happen sometime this month. 

“If things keep going the way they are, at this pace, it could happen within a month,” he said. Arkham Intelligence data shows that nearly 26,000 BTC have been leaving GBTC weekly.

On Monday, $302.6 million left the fund, showing that the carnage is not yet over—and putting downward pressure on the price of BTC (the top coin right now is down 6% in the past week, trading for $65,665, and is more than 11% below its new all-time high of $73,737.)

CoinShares Head of Research James Butterfill told Decrypt that the fund would keep bleeding.“Given they have lost $15 billion in assets under management this year, much of it going to their competitors, they have one of two choices: Cut the fee or keep the fee high and accept continued losses,” he said. Butterfill believes IBIT will flip GBTC by May. 

But despite GBTC flipping IBIT in terms of assets under management, Grayscale’s fund will still probably do well, Balchunas said. “The good thing about Grayscale is they have the Bitcoin bull market there to subsidize our outflows,” he said, adding that GBTC will continue to do well due to its loyal base.

Edited by Ryan Ozawa.

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