Grayscale's Bitcoin ‘Mini-Me’ Trust Will Undercut Fellow ETFs With Lowest Fees

After months and billions of dollars in withdrawals from its long-running Grayscale Bitcoin Trust (GBTC), Grayscale is prepping a new Bitcoin exchange-traded fund (ETF) with the lowest fees on the market.

The fund manager filed to introduce the product in March after investors relentlessly redeemed GBTC following its conversion to a spot ETF in January. On some days, hundreds of millions of dollars left the fund—although Grayscale CEO Michael Sonnenshein said the trust was reaching equilibrium in recent weeks. 

In an updated filing with the Securities and Exchange Commission, Grayscale said that its new “Mini Trust” would have fees of 0.15%. That’s lower than BlackRock’s iShares Bitcoin Trust (IBIT), which will up its fees to 0.25% after a 12-month promotional period fee of 0.12%. 

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The filing noted that 10% of GBTC assets will be used for the smaller spinoff fund.

“Interesting,” wrote Bloomberg ETF analyst Eric Balchunas on Twitter. ”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.”

BlackRock’s IBIT has been massively successful and is quickly catching up with Grayscale’s GBTC in terms of assets under management. As of today, IBIT has $17.5 billion in assets, while GBTC has $19.6 billion.

Before, GBTC operated like a closed-end fund, and it was difficult to cash out. But when it became an ETF in January, investors claimed their gains or moved to a new, cheaper product. In addition, many of the redemptions were bankrupt crypto companies with exposure to GBTC cashing out. 

Grayscale told Decrypt earlier this month that the high rate of redemptions was expected and nothing to worry about.

Bitcoin ETFs Lose Ground for First Time in Weeks, Weighed Down by Grayscale

Along with a post-peak Bitcoin price drop, the red-hot market for spot Bitcoin ETFs is apparently cooling as well. Bitcoin now is trading well below its 2021 all-time high of $69,044 despite flipping the market cap of silver and skyrocketing to new levels above $73,000 per coin last week. One reason? The massive amounts of capital still flowing out of Grayscale’s Bitcoin Trust (GBTC). The new exchange-traded fund (ETF) evolved from an essentially closed-end fund that had been available for years...

The price of Bitcoin is now at $66,227 per coin, a 2.5% seven-day jump. 

Edited by Ryan Ozawa.