In a strategic move, Grayscale Investments launched a new low-cost version of its Bitcoin Trust ETF, GBTC, following a similar approach to that adopted by BlackRock. The new move aims to attract more investors by significantly reducing fees, a move that has already proven successful in other ETF sectors managed by BlackRock.
Recently, Grayscale rose to prominence after a significant legal victory against the SEC, which resulted in the approval of this type of fund. Although GBTC is currently the largest fund of its kind, with over $20 billion in assets, it has faced constant outflows due to its comparatively higher fees. These outflows have benefited competitors offering lower fees, such as BlackRock's iShares Bitcoin Trust and Fidelity's Wise Origin Bitcoin Fund.
To compete more aggressively, Grayscale is introducing the Bitcoin Mini Trust (BTC), which will have a reduced fee structure. This new fund will be powered by a portion of GBTC's bitcoin holdings, using a spin-off method common in commodity ETFs. Additionally, the company plans to launch two new ether ETFs, attempting to further diversify its offerings and replicate low-cost strategies similar to those of BlackRock.
Neena Mishra of Zacks Investment Research commented on the initiative: “While GBTC may remain popular among traders for its liquidity, the new BTC will likely attract more long-term investors.” In contrast, Morningstar's Ben Johnson takes a more skeptical view, doubting that Grayscale's new strategy will achieve the same success given the market already saturated with low-cost options that offer similar exposure.
Johnson adds that, “A small fee advantage might help, but BTC still needs to prove itself against established competitors.”
Grayscale's move to launch a more accessible Bitcoin ETF is a reflection of tactics previously used by industry giants like BlackRock. However, even as Grayscale mirrors these successful strategies, it faces challenges in a competitive market full of similar, low-cost options.
