Grayscale has announced its Bitcoin Mini Trust, a spinoff Bitcoin ETF with a much lower fee to regain investor interest amidst increasing competition in the market.
Introduction of Bitcoin Mini Trust (BTC)
After experiencing significant outflows totaling billions of dollars from its Grayscale Bitcoin Trust (GBTC) over several months, Grayscale is taking action. The company is preparing to launch a new Bitcoin exchange-traded fund (ETF) with the aim of offering the lowest fees on the market. This move comes as GBTC tries to stem further losses caused by investor withdrawals.
Grayscale Investment LLC filed its new spot ETF, the "Bitcoin Mini Trust," with the Securities and Exchange Commission (SEC) on March 12, 2024. This ETF, which is a spin-off of GBTC, will be listed on NYSE Arca under the ticker "BTC."
Fees and Comparison
Notably, the Bitcoin Mini Trust will come with a fee of just 0.15%, making it the lowest-cost Bitcoin ETF in the market. This significantly lower fee of the Bitcoin Mini Trust stands in stark contrast to the 1.5% fee required to trade GBTC, Grayscale's main fund.
Additionally, it is lower than the fees charged by other Bitcoin ETFs, such as BlackRock’s iShares Bitcoin Trust (IBIT), which will increase its fee to 0.25% after a promotional period. Currently, IBIT has assets of $17.5 billion, while GBTC has $19.6 billion.
Grayscale's Strategy
The decision to introduce the Bitcoin Mini Trust comes after months of relentless redemptions from GBTC following its conversion to a spot ETF. Grayscale CEO Michael Sonnenshein indicated that the trust was approaching equilibrium in recent weeks.
ETF analyst Eric Balchunas commented,
"A mini-me low fee version of $GBTC which investors in GBTC will be able to get into [without a] tax hit (I believe) via a special dividend. No brainer in our opinion."
Recent Market Dynamics
In recent weeks, significant inflows have been seen in other Bitcoin ETFs. BlackRock’s IBIT alone attracted $15 billion in inflows, followed by Fidelity’s FBTC with $8 billion, ARK 21Shares’s Bitcoin ETF ARK with $2.2 billion, and Bitwise’s BITB with $1.7 billion. However, GBTC's outflows of $16.7 billion have overshadowed these inflows, resulting in a total net inflow of $12 billion across all Bitcoin ETFs.
Implications
With its significantly lower fee, Grayscale's move to introduce the Bitcoin Mini Trust could be interpreted as a response to its declining popularity among investors. Despite being the world's largest crypto asset manager, Grayscale has faced challenges due to the high fee on GBTC. With the introduction of BTC, Grayscale aims to attract investors back to its platform. Currently, the Franklin Bitcoin ETF (EZBC) is the lowest-cost Bitcoin exchange-traded fund, with a fee of 0.19%.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
