GBTC - GBTC: Bitcoin Investors Should Stick Here Around At Their Own Risk

2024-03-18 08:30:13 ET

Summary

• Grayscale Bitcoin Trust is facing increased competition from other asset management firms launching their own Bitcoin ETFs.
• The current expense profile of GBTC is not appealing, but the fund has filed amendments to convert its structure into an ETF.
• Grayscale has filed for a mini Bitcoin ETF (BTC) under the ticker symbol BTC, which could lower expense fees and benefit existing GBTC shareholders.

Investment Thesis

Last August, Grayscale Investments, the sponsor of the Grayscale Bitcoin Trust ( GBTC ) fund, won a landmark case against the SEC in their fight to convert their previous holdings into an ETF. In anticipation, investors, investment firms, and hedge funds allocated capital towards GBTC, with the fund benefiting from rapid price appreciation as compared to the underlying fund’s asset, Bitcoin (BTC-USD), as can be seen in the chart below. I’ve also added ProShares Bitcoin Strategy ETF (BITO), another peer of GBTC, below.

Unfortunately for GBTC, the flurry of Bitcoin ETFs created the opportunity for other asset management firms to launch their own ETFs. The case that Grayscale won last year set the precedent for asset management firms to launch their own ETFs simultaneously, as GBTC filed their own amendments to convert their previous fund structure into that of an ETF....

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