Grayscale Unveils Cheaper Bitcoin ETF in Bid to Mimic BlackRock's Success

Grayscale Investments is adopting a strategy similar to BlackRock, launching a new, lower-cost version of its Bitcoin Trust ETF, GBTC. This move might not be as effective as BlackRock's previous efforts in different ETF sectors, but industry experts say it could still attract significant assets quickly. Grayscale, a leader in the bitcoin ETF market, recently won a legal battle against the SEC, which led to the regulator approving such funds.

However, GBTC, despite being the largest with over $20 billion in assets, has been experiencing consistent outflows due to its higher fees compared to competitors like BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund. Grayscale plans to launch the Bitcoin Mini Trust (BTC), which will feature a lower fee structure, to combat these outflows.

This new fund will be seeded with a portion of GBTC’s bitcoin holdings, utilizing a unique spin-off mechanism common in commodity ETFs. Moreover, Grayscale aims to introduce two types of ether ETFs, showcasing a varied approach similar to past strategies by other fund managers like BlackRock, which launched lower-cost versions of its funds without reducing fees on its larger, established funds.

Industry observers, like Neena Mishra from Zacks Investment Research, suggest that while GBTC might retain popularity among traders due to its liquidity, the new BTC is expected to appeal more to long-term investors. On the other hand, Ben Johnson of Morningstar doesn't foresee this strategy as successful for Grayscale due to the already competitive market filled with low-cost options offering the same exposure. Despite potential challenges, introducing a cheaper Bitcoin ETF could attract new investments.

Johnson acknowledges that a slight fee advantage could help but believes BTC still needs to catch up with established competitors. In summary, while Grayscale's new strategy of offering a cheaper Bitcoin ETF mirrors successful tactics used by giants like BlackRock, it faces a tough road ahead in a market brimming with similar, low-cost investment options.