Summary Grayscale Bitcoin Trust ETF remains unattractive due to its high 1.5% expense ratio versus peers’ 0.20–0.25%. GBTC’s AUM has slipped to third place among spot Bitcoin ETFs, with lower liquidity and continued outflows despite reduced fee flight in 2025. Bitcoin’s network fundamentals weakened in 2025, with transaction fees down 78% YoY and active addresses and transactions also declining. GBTC will track Bitcoin’s price, but long-term investors pay unnecessary fees versus lower-cost alternatives like IBIT and FBTC. Ten months after I last covered the Grayscale Bitcoin Trust ETF ( GBTC ) for Seeking Alpha, the GBTC share price is essentially flat. When I wrote that prior GBTC piece, it was actually the first in a series of downgrades that I gave BTC proxies from 'buy' to 'hold.' Down 6% during 2025, Bitcoin USD ( BTC-USD ) was one of the major laggards in the financial markets and trailed nearly every major investment asset class. In this update, we'll look at on-chain data, valuation multiples, and capital flows to assess whether or not it is time to upgrade GBTC back to a 'buy' in 2026. On-Chain Data and Valuation Multiples There are several Bitcoin 'analysts' on platforms like X who would argue that on-chain network data is irrelevant to Bitcoin's bull case. My argument for years has been that over shorter-term time frames, it is likely true that on-chain usage doesn't matter as much as other factors. However, over multi-year time frames, my view is that fundamentals will ultimately matter for Bitcoin. One of my key criticisms of Bitcoin has been the eroding security model that has seen a total collapse in fees paid to miners. Quarterly Averages Q4-25 Q3-25 Q4-25 YoY MoM DAAs (000s) 514.9 487.3 472.6 -8.2% -3.0% Transactions (millions) 49.4 42.3 41.6 -15.8% -1.7% Fees (millions) $125.5 $43.3 $27.6 -78.0% -36.3% Avg Tx Fee $2.62 $1.06 $0.68 -74.0% -35.8% Source: Token Terminal While I've typically looked at these numbers through monthly averages, since we're at the beginning of a new year, I thought it would be beneficial to instead look at quarterly averages for this report. Here we can see that Daily Active Addresses (DAAs) were down 8% year over year, transactions were down by 16% YoY, and fees from transactions were down a staggering 78% from Q4-24. While fees are not a significant portion of miner rewards today, they will be down the line due to Bitcoin's four-year halving events. The latter of which sees reduced token issuance paid out in return for the high levels of compute capex and energy spending required to secure a blockchain ledger that fewer people are using as each year goes by. I think this is really put into perspective when viewed through a circulating price-to-fees multiple: Bitcoin P/F Ratio (Token Terminal) Judging by this metric, Bitcoin is more expensive than it has ever been in its history relative to network fees, per data from Token Terminal. This Capital Flows and Peer Funds Since the year-to-date capital flow story offers less than a week of data, we'll instead look at full-year numbers for 2025 and how they compare with 2024. Total digital asset market investment flows were slightly negative by 3.3% during the full year 2025. Interestingly, this was driven almost entirely by a 35% year-over-year decline in Bitcoin investment flows from $41.7 billion in 2024 down to $27 billion in 2025: Asset (mil) 2025 2024 YoY Change Bitcoin $26,984 $41,690 -35.3% Ethereum USD ( ETH-USD ) $12,698 $5,335 138.0% Multi-asset -$214.0 $295.0 -172.5% Ripple USD ( XRP-USD ) $3,697.0 $608.0 508.1% Solana USD ( SOL-USD ) $3,562.0 $310.0 1049.0% Total $47,152 $48,740 -3.3% BTC Dominance 57.2% 85.5% -33.1% Source: CoinShares To be sure, Bitcoin was still the dominant recipient of capital flows last year with a commanding 57% share of total flows. However, that too was down from over 85% in 2024. None of this should really be all that unexpected, from where I sit. With the emergence of more US-listed spot ETFs last year and the growing interest in DAT strategies centered around altcoins, the natural progression of digital asset capital flow is into a broader mix of assets rather than just one or two. And yet, the multi-asset products saw outflow rather than inflows in 2025. My read on that is more an indication of poor "diversified" product construction rather than indifference to digital asset diversification as a concept. ETFs and other funds were just the second-largest source of BTC acquisition last year: Holding Entities 12/31/2024 12/31/2025 Change % Private Companies 271,742 288,302 16,560 6.1% Governments 513,725 647,021 133,296 25.9% DeFi/Smart Contracts 169,186 376,812 207,626 122.7% ETFS/Funds 1,287,054 1,488,932 201,878 15.7% Public Companies 598,714 1,093,648 494,934 82.7% Total Holdings 2,840,421 3,894,715 1,054,294 37.1% BTC/USD $93,595 $88,398 -$5,197 -5.6% Source: BitcoinTreasuries Of the known holding entities, the biggest category for BTC growth by nominal change was public companies at 495k BTC. Though it should be mentioned that 97.6% of public company BTC holdings growth came from a single entity. Looking at the breakout by ETF issuer, it's very clear that iShares was again the winner in 2025 among the four major holders of digital assets through ETF products: Provider (millions) YTD Flows AUM 2025 Flows 2024 Flows iShares $336 $81,419 $35,056 $40,795 Grayscale $131 $26,198 -$2,851 -$18,882 Fidelity $99 $22,001 $2,151 $11,864 Bitwise $55 $7,772 $1,105 $2,601 Total $621 $137,390 $35,461 $36,378 Source: CoinShares Grayscale still owns the number 2 spot behind iShares in terms of AUM. However, I suspect that Fidelity could overtake Grayscale in total AUM by the end of 2026, given what we've seen over the last two years. Fidelity has already taken over the number 2 spot in the spot Bitcoin ETF race. While Grayscale's outflow problem was much smaller in 2025 than it was in 2024, the company is clearly still dealing with a 'fee flight' problem due to its higher management fees on its legacy products. Fund Name Inception Expense Ratio AUM Avg Vol/AUM Grayscale Bitcoin Trust ETF 09/25/2013 1.50% $14.78B 2.7% iShares Bitcoin Trust ETF ( IBIT ) 01/05/2024 0.25% $69.23B 4.7% Fidelity Wise Origin Bitcoin Fund ETF ( FBTC ) 01/10/2024 0.25% $18.12B 2.9% Bitwise Bitcoin ETF ( BITB ) 01/10/2024 0.20% $3.46B 4.1% ARK 21Shares Bitcoin ETF ( ARKB ) 01/10/2024 0.21% $3.39B 4.4% Source: Seeking Alpha, as of 1/5/26 At a 1.5% expense ratio, GBTC is still far away from the rest of the market from a management fee standpoint. When the fund was converted to a spot ETF back in 2024, it was the largest fund in the table above by AUM. Presently, it is down to the third-ranked fund after IBIT and FBTC. Finally, at just 2.7% average volume to AUM trading on a daily basis, GBTC is less liquid than the other funds with the top 5 spot BTC AUM. Closing Summary While the Grayscale Bitcoin Trust ETF will work fine for investors who want simple exposure to Bitcoin, I don't think it's the best fund in the category due to the enormous fee relative to peers. As a trading vehicle, GBTC still has decent liquidity but again falls short relative to peers. All this said, for a simple, straightforward Bitcoin play, GBTC will pace with Bitcoin. However, long-term investors will continue to pay more than they need to by buying GBTC over alternatives. Whether or not Bitcoin rebounds in 2026, GBTC is a fund that I'd personally avoid. Grayscale's mini trust is a perfectly fine low-fee alternative to GBTC.
