How Grayscale's 2.5% Fees Could Impact Investor Interest

Every time that we see a big events, you know, for crypto, it gets reflected in the market because we still the markets are still following narrative and not only fundamentals. Hello and welcome to today's episode of Markets Daily by Coin Des, it's Thursday, July 17th and I'm your host, Helene Braun. The market is looking relatively quiet this morning. Both Bitcoin and Ethereum are roughly flat. The Coin 20 index which measures the performance of the 20 biggest assets is down by about 0.84%. Yesterday, we received an update on the spot, Ethereum ETF s all yours but one I believe pro shares submitted their final filings as expected and are now ready to launch their funds as soon as they receive the green light from the sec. One detail that these final documents revealed was the management or sponsor fee that the issues would charge investors. And to no surprise, although our newsroom was indeed a little surprised by the magnitude of it but gray scale its be 10 times higher than in competitors. They'll be charging investors 2.5% on their trades. While blackrock Fidelity and co are somewhere between 0.25% and 0.19% 1 expert on X said that they, they quote, might have screwed themselves. So, you know, if you follow this five Bitcoin ETF flows, you know, that gray skills, Bitcoin Trust has lost billions of dollars in assets under management while, while all other funds have seen inflows. But I'm sure there is a strategy here somewhere and maybe our guests will know more. So let's bring in Paola or Gel co founder and CEO of High Life Fund Management. Hi Helen, how are you doing? It's such a pleasure speaking with you now, thanks so much for joining us. Paula has gray skill not learned from the launch of the spot. Bitcoin ETF S. Now that fee was at 1.5 percent, which was already considered way too much by experts in the space. Now, they went even higher with the Ethereum ETF. Why would they do that when they've, you know, been bleeding billions already with their Bitcoin Fund? It's very interesting and that's a great question. And I asked that question myself, you know, especially because Black Just Black Rock just disclose uh their 0.25 fee for the spot Ethereum ETF filing as well. So I think the proposed fees for these Ethereum ETF S are very variant uh with Franklin Templeton suggesting a fee as low as 0.19%. And as we talk about gray scale, gray scale is looking to convert an existing fund into an ether ETF with a fee of 2.5 with it sounds pretty high, especially with the lesson lessons learned, you know, with the Bitcoin ETF. Um Also great scale is planning to spin out 10% of assets into an Ethereum mini trust to safeguard at least 10% of the assets over the short term. I think they're doing this aiming to avoid the high fee issues that dam the Bitcoin Ethereum. Uh I'm sorry, the Bitcoin ETF launch in the past now, what do you think will be the deciding factor here for investors looking to invest in one of these funds? Will it depend on the fees or is it going to be name recognition? We'll see Blackrock and Fidelity dominate again, I think it's gonna be a combination of both. Uh Definitely we'll see over and over again that the name brand carries a lot of weight but definitely in some cases the fees um also as well. Um You know, it's interesting like Bloomberg, intelligence analysts say far noted that seven out of the 10 have set to launch are offering fee waivers with some waiving fees entirely for periods ranging from 6 to 10 months. And many issuers involving the E three ETF race have previously launched Bitcoin funds. So which drew which as we know have drawn like around 6.6 billion in assets in the first three weeks and attracted around net 33.1 billion in inflows by the end of last month in June. So despite initial skepticism inflow predictions for authors remain very optimistic. And Ethereum has a smaller market size and trading volume compared to Bitcoin, which means we could see more price volatility. We have to remember that Bitcoin's market value is just over one trillion while it is around 359 billion. But I want to point out that the extensive and growing ecosystem built on Ethereum is expected to attract more investment into the existing protocols supporting and empowering the Ethereum ecosystem. Even the galaxy research estimates monthly inflows of 1 billion for Ethereum ETF S and Tom Don Levy from NV global expects up to 10 billion in inflows over the first few months. So those are big numbers. Uh even Bank X uh two and 2000 price target for the ET for the Ethereum ETF is based on its forecast that Ethereum take rate will generate around 66 billion in annual revenue by 2030. So those are pretty big numbers. So I think in essence, the approval of the CT is not just a win for Ethereum but for the entire crypto space, I think it really is validating the asset class and could pave the way for more financial products that integrate assets and drives for adoption uh and investment from traditional finance. Now you spoke about price volatility here for a little bit. What's your overall view of the market right now, we've been seeing a lot of volatility, especially in Bitcoin in the past few weeks. What do you attribute this to? I, I think, you know, the crypto market is known for its volatility and the recent sentiment shifts are a testament to these characteristics, right? I mean, just few weeks ago, we saw the market driven by greed as we're seeing it again and investors were eagerly buying into this rally. However, that quickly turned to fear as prices began to drop into the 50,000 only to revert back to greed shortly after. And we're seeing now, I think the price, as you say, they're, they're being pretty flat. I mean, this roller coaster, you know, highlights obviously the motion volatility of the crypto space without say. Um I think that Bitcoin's recovery above 65,000 this week is particularly, you know, not worthy. And I think you have touched on this point before on previous podcast. Um It's not just about price. I think it's a reflection of a broader market sentiment and external events. The rally partly was fuel by the broader market reaction to the shocking of an assassination attempt on former President Donald Trump. And these events sparked a wave of market activity affecting not only Bitcoin but other major cryptocurrencies, right? Like Ethereum, Solana B and B and even some meme coins related to Trump. Now. Why, why was that paola? Why is, what's the connection here between that event and and crypto markets. III I believe that having uh the approval of the stamp of approval of one of the major presidential candidates is unprecedented. We've seen, you know, the Democratic Party being very tough on regulation and station in the digital asset space. And I think that having that stamp of approval and even with the VP nominee of Trump with Vance, I think that people feel more confident that there is space and there is a bright future for crypto. Now it was announced, I believe earlier this week that Donald Trump is gonna be speaking at the Bitcoin Conference in Nashville next week. Is there an impact of these conferences on the market? Usually, I, you know, it's I'm asking that question myself. But I think yes, I think historically, every time that we see a big event, you know, for crypto, it gets reflected in the market because we still the markets are still falling narrative and not only fundamentals, but especially, I mean, the line up of participants for next week's Bitcoin conference is amazing. I think it's gonna be very interesting. I don't know if you're attending. I'm not, unfortunately, but we're not either. We have, we have two presidential candidates, right? We have Donald Trump, we have Robert uh Kennedy, we also have very big personalities in the crypto space like Michael Saylor, Anthony Scaramucci also going to be there. Even Russell brand, I think that's attracting a lot of attention and I'm very curious to see how the market will react. I anticipate, you know, and this is obviously my personal opinion. I think we're going to keep seeing a rally and I think the price of Bitcoin it will go further up. Now, Paula lastly, I want to ask you, you know, you come from a banking background having worked for HS BC. We see more and more of the, let's say more reluctant banks embrace the crypto industry and launch new products in the space Goldman Sachs last week. And there was news yesterday that State Street is looking to create stablecoins and tokenize deposits to settle transfers on Blockchain rails. Why now? Well, I think it makes sense to me, you know, especially because you mentioned my background, I think for, since we discovered Bitcoin, you know, and even when we first launched our hedge fund of funds in 2018, we have seen a lot of friction and resistance, you know, from traditional finance and also regulators, you know, to accept the space, embrace cryptocurrencies and even Blockchain technology. But more and more, I believe that trust by institutions like big banks and like a State street, they're seeing the major potential of the underlying technology, not maybe not so much yet, you know, the cryptocurrencies, but they're seeing the potential of implementing Blockchain in their platforms. And that's not only a coi coin and it's not a coincidence. Um That is at this moment. As I said before, I think the poli political environment and the potential uh stability of having a regulatory framework in the US for these asses is driven this interest much, much more, much more, much more um every day. All right, Paula, thank you so much for sharing your insights with us this morning. Thank you so much Helen for having me. It has been a pleasure and I hope I can see you again.