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Key Takeaways
- Grayscale Bitcoin Trust (GBTC) holders as of the end of trading on Tuesday will see 10% of their holdings converted to the new Grayscale Bitcoin Mini Trust.
- This move largely drove a more-than-10% drop in the value of GBTC shares Tuesday.
- The Grayscale Bitcoin Mini Trust comes with lower fees than GBTC.
- GBTC investors as of Tuesday will receive one share of the new ETF per each GBTC share they own.
Grayscale’s Bitcoin Trust ( GBTC ), the second-largest spot bitcoin exchange-traded fund (ETF) by assets, lost 11% of its value Tuesday. But investors shouldn’t worry, Grayscale said.
The decline was largely expected, as 10% of the bitcoin held by the fund was spun off to create the Grayscale Bitcoin Mini Trust . The additional drop could be attributed to changes in bitcoin’s price, which trended about 2% lower in recent trading.
What’s Happening With the Grayscale Bitcoin Trust?
The Grayscale Bitcoin Trust existed as a bitcoin investment fund even before the U.S. Securities and Exchange Commission approved spot bitcoin ETFs in January this year. Once that approval came, the existing Grayscale fund converted to a spot bitcoin ( BTCUSD ) ETF. However, it witnessed massive outflows, mostly on account of the comparatively higher fees it charged.
The Grayscale Bitcoin Mini Trust is a new spot bitcoin ETF that comes with lower fees and offers smaller denominations than the Grayscale Bitcoin Trust.
A distribution of 10% of the existing fund’s bitcoin holdings will seed the new ETF. So, what does that mean if you’re an investor in GBTC?
Investors in GBTC as of Tuesday will be entitled to shares in the new ETF, although if you buy GBTC after Tuesday, you won’t get any shares in the new fund. Existing holders will receive one share in the new ETF for each share held in GBTC.
Pending regulatory approval from the SEC, the Grayscale Bitcoin Mini Trust is anticipated to launch on NYSE Arca, trading under the ticker “BTC.”
Should I Care About Grayscale’s ‘Mini’ Bitcoin ETF?
With this new product, Grayscale hopes to offer an ETF that is more competitive with other options on the market, such as BlackRock’s iShares Bitcoin Trust ( IBIT ), which has experienced just under $20 billion of inflows since its launch in January, according to Farside Investors. Meanwhile, GBTC has posted nearly $19 billion in outflows. The iShares ETF charges a 0.25% fee versus GBTC’s 1.5%.
A similar situation exists with the Grayscale Ethereum Trust ( ETHE ) and the Grayscale Ethereum Mini Trust; however, a key difference is that the Grayscale Ethereum Mini Trust was available on Day 1 of the first spot ether ( ETHUSD ) ETFs being available for trade on U.S. exchanges earlier this month.
As of the end of trading on Monday, ETHE has recorded roughly $1.7 billion in outflows, while the Grayscale Ethereum Mini Trust has received $168.9 million of inflows, according to Farside Investors.