Grayscale Investments is launching a more cost-effective version of its Bitcoin Trust ETF, following a strategy reminiscent of BlackRock’s successful approach. While this move may not replicate BlackRock’s achievements in other ETF sectors, industry experts believe it could still attract significant assets swiftly.
Grayscale has recently obtained SEC approval for such funds after winning a legal battle against the regulator. Despite being the largest with over $20 billion in assets, Grayscale’s existing Bitcoin Trust (GBTC) has been experiencing continual outflows due to its higher fees compared to competitors BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund.
To address this, Grayscale plans to launch the Bitcoin Mini Trust (BTC) with a reduced fee structure. This new fund will be seeded with a portion of GBTC’s bitcoin holdings using a spin-off mechanism commonly seen in commodity ETFs.
In addition to the Bitcoin Mini Trust, Grayscale intends to introduce two types of ether ETFs.
While GBTC is likely to remain popular among traders due to its liquidity, industry observers like Neena Mishra of Zacks Investment Research anticipate that BTC will appeal more to long-term investors.
However, Ben Johnson from Morningstar is sceptical about Grayscale’s strategy, given the competitive landscape filled with low-cost alternatives offering similar exposure. He acknowledges that a slight fee advantage could attract new investments but believes BTC still has ground to cover to compete with established competitors.