Grayscale Investments is preparing to file for a Bitcoin ETF as competition intensifies
Grayscale Investments, which is best known for its Grayscale Bitcoin Trust (GBTC), intends to file a conversion application for its flagship fund to a spot ETF early next week. Grayscale, the market leader in the digital asset sector, is now seeking to restructure its fund in response to increased competition.
The Securities and Exchange Commission (SEC) authorized the first-ever Bitcoin futures exchange-traded fund (ETF) on Friday, which is scheduled to begin trading on the New York Stock Exchange early next week. Many have praised the move as a “watershed moment,” since it demonstrates Bitcoin’s credibility as an asset class to Wall Street and mainstream investors.
Bitcoin (BTC/USD) fell marginally after rallying to monthly highs of $63,000 before retreating to $61,000. Tradingview.com
The ETF, which will be managed by investing company ProShares, will have a modest 0.95 percent management fee, compared to Grayscale’s 2%. Another advantage of the new ETF is the absence of redemption periods, which has been a source of contention for GBTC investors since the fund’s inception.
Why Grayscale’s Proposed Bitcoin Spot ETF Could Outperform Futures ETFs
While the Bitcoin-futures ETF is a positive step toward making cryptocurrencies more accessible to the average investor, many crypto investors argue that the ETF’s use of derivatives contracts traded on the Chicago Mercantile Exchange (CME) will prove to be far inferior to a spot ETF holding actual Bitcoin.
Contango, which happens when futures prices are higher than anticipated future spot prices, implies that investors will miss out on possible profits if Bitcoin futures contracts expire with a price greater than the cryptocurrency’s spot price. In his Twitter thread, Joe Orsini, director of research at Eagle Brook Advisors, detailed the following disadvantages:
Grayscale’s spot Bitcoin ETF, if authorized, would be backed by real Bitcoins, not derivatives that follow the cryptocurrency’s price. Grayscale already controls a significant part of the world’s Bitcoin supply.
Barry Silberts, the creator of Digital Currency Group and Grayscale Investments, went to Twitter to tease GBTC users about future developments. “Pals don’t let friends purchase and own futures-based ETFs,” he joked. However, there may still be some validity to the phrase.
Also Read: The United States’ First Bitcoin Futures ETF To Debut On Tuesday
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