Grayscale launched its low-cost Bitcoin Trust on Wednesday. This is a significant step forward in Grayscale’s plan to appeal to investors who have varying product preferences.
Now, it has added a second US-spot bitcoin ETF. “on different parts of the spectrum,” Grayscale’s managing director John Hoffman said Blockworks during an interview.
Farside Investors shows the Grayscale Bitcoin Mini Trust has a day-one inflow of $18M, with ticker BTC.
Although not a particularly impressive figure for a group that saw $17,7 billion in net inflows over the past six months, this amount was almost equal to $21 millions brought in by BlackRock’s iShares Bitcoin Trust. Other US BTC funds recorded zero or even negative flow on Wednesday.
Grayscale Bitcoin Trust (GBTC), the US’s first ETF, was transformed into an exchange-traded fund in January. The Grayscale Bitcoin Trust (GBTC), which had a 1.5% charge, was the first ETF to hit the market in January. Since then, it has suffered net outflows totaling $18,8 Billion.
Bitcoin Mini Trust, a product of the firm, was designed to provide a cheaper option. (At 0.15%). Its initial seeding came from distributing 10% of GBTC’s underlying Bitcoin to BTC — meaning the new ETF started with roughly $1.7 billion.
Grayscale launched BTC eight days after launching its Ethereum Mini Trust. Grayscale’s BTC Trust offered the same fee, 0.15%, and similar relation to its Ethereum Trust flagship (ETHE).
Grayscale’s Ethereum mini trust has seen a net of $201 million inflows. ETHE saw about $2 billion in investor capital leave the ETF in just seven days.
Hoffman said that Grayscale Mini Trusts, which have the lowest fees of any segment, are also highly accessible to retail investors due to their ultra-low prices.
“Literally you can get exposure to bitcoin and ethereum for less than $10 combined now that we have BTC and ETH,” The executive also added.
The share prices of legacy products GBTC, ETHE and GBTC are significantly higher. These products have a long track record, a large asset base, and many shareholders.
“Our experience with ETFs and our experience with clients shows us that investors have different priorities,” “He said” “We really want to meet them where they are.”
Read on for additional excerpts of Hoffman’s interview at Blockworks:
Blockworks: Grayscale has launched cheaper versions of its bitcoin and ether products. Has it considered lowering its fees for GBTC (1.5% and 2,5% respectively) and ETHE?
Hoffman: The automobile industry is a good example. Manufacturers will produce trucks, sedans and sports cars. All of these offer different features and benefits.
In many cases, sophisticated investors look at more than just the management fee. In reality, they are looking at the “total cost of ownership” or what is commonly known as management fees.
GBTC for example has tracked net assets value better than any other bitcoin ETF. Alternatively, its discount and premium have been lower than competitor products and this is part of its total cost of ownership.
Investors are either buying it long or selling it short. Or they may be lending it. … The point is there’s a lot more that meets the eye here than management fee.
Two capabilities on opposite ends of the spectrum are important.
Blockworks: How might Grayscale, in terms of assets, catch up to BlackRock, Fidelity, and other competing bitcoin funds?
Hoffman: Grayscale is unique in comparison to other investment firms because we have a deep understanding of the crypto market. This is what we’ve done for more than a decade.
This is reflected in the product we offer, as well as in all of our other support services. So we think we’re actually — despite being later to the market — incredibly well-positioned to help clients achieve their financial outcomes through the crypto space.
If you look at GBTC … it obviously opened up the market to bitcoin investing. ETHE also did this. BTC and ETH will make this very accessible. We continue to develop products that are way ahead of the curve.
This is not something we think about in the context of raising assets. Our focus is on how to help clients get outsized returns in order to reach their financial goals.
Blockworks: You can find out more about the ETF’s here.
Hoffman: If you zoom out, these Ethereum ETF products that came to market a little over a week ago are one of the most successful ETF launches in the history of the US market — looking at volume, AUM, net new assets.
Look at the location [the industry] We believe that from a crypto adoption standpoint, this is still in its very, early stages. The $2.5 trillion industry is expected to grow to at least $10 trillion. We’re playing the long-term game.
Fivety-two millions Americans are crypto owners. Globally, it is between 2% and 3%. This number is expected to increase. We want to educate our clients and guide them through this new disruptive innovation.
Blockworks: Grayscale may be looking to introduce new ETFs in the future.
Hoffman: This is what I mean when I say we are pushing the boundaries of innovation. [BTC] A spin-off is an innovative approach to bringing a product to the market.
There’s a precedent for spot ethereum, and now spot bitcoin. You’ll see that the ETF packaging will become more sophisticated as regulatory certainty around this asset class increases.
Blockworks: More generally, What are you expecting in terms of crypto markets over the next few months?
Hoffman: It’s not my place to make a pronouncement on prices in the near term.
With ETFs, in the longer run, we’ve connected to the pipe of $100 trillion dollars of US capital and $750 billion of global capital. [by] Reducing frictions is a good way to increase exposure for both [ether] The bitcoin currency is the newest form of payment.
We know that these technologies grow in an exponential fashion — non-linear — and we think more is going to happen in the next three years than has happened in the prior 15 years.
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