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Competition among institutional Bitcoin providers is heating up as fees are cut in preparation for a new influx of investors.
NYDIG, a Bitcoin (BTC) retail investment company, has announced a significant price cut for customers who use it to gain exposure to BTC price activity.
In a press release on March 24, the company confirmed that effective immediately, its access fee had been reduced to 0.3%.
Bitcoin buyers pick their premium
The switch comes just days after NYDIG’s FS Select NYDIG Bitcoin Fund was chosen by Morgan Stanley as one of three options to be sold to its affluent institutional clients.
The fee cut, though potentially timely, could have ramifications for competitors, especially the Grayscale Bitcoin Trust (GBTC), whose management fees currently cost clients 2%.
“NYDIG’s current price plan is 50-75 percent cheaper than equivalent passive bitcoin entry offerings open to customers, and, importantly, 0.30 percent reflects the fund’s true nett cost ratio, including a Big-4 audit and regulatory, storage, and accounting costs,” according to the press release.
One reason for GBTC’s premium — how much more clients pay for Bitcoin exposure on top of the nett asset value price — falling into record negative territory this year is competition from entrants.
At one time, the premium gave a 15% discount to the spot price for GBTC shares. It had recovered to about -5.3 percent as of March 16, the most recent date for which data is available.
Undercutting gold access
Continuing, NYDIG executives built on the sense of expectation created by CEO Robby Gutmann in a recent interview. Prior to the Morgan Stanley announcement, Gutmann stated that the coming weeks will see a slew of “game-changing” institutional adoption moves.
“Expenses are significant, and this will not be our last fee reduction,” said founder and executive chairman Ross Stevens in a press release.
“Further, as bitcoin’s sound money advantages are more widely understood, I believe it is only a matter of time until U.S. dollar depreciation causes bitcoin’s market cap to surpass that of gold, so it is fittingly symbolic that NYDIG has now made the total cost of bitcoin access 25% lower than the total cost of gold access.”
This week, CNBC host Jim Cramer admitted that the success of gold “disappointed” him. Bitcoin, on the other hand, he said, had made him “a lot of money.”