Grayscale’s Bitcoin Mini Trust started trading on NYSE Arca this week after the SEC greenlight, offering industry low-cost Bitcoin exposure.
According to data from Farside Investors, investors poured around $191 million into the Grayscale Bitcoin Mini Trust (BTC) on July 1, bringing the fund’s total net inflows to $209 within two trading days.
The Bitcoin Mini Trust started trading early Wednesday morning after getting approval from the U.S. Securities and Exchange Commission (SEC) last week. The trading came right after its registration statement was activated.
More BTC Investment Options
The ETF ended its debut day on a low-key note, capturing $18 million in net inflows, data shows. However, that was still a good start, as several of BTC’s competitors reported losses over the same period.
Similarly, while Grayscale’s BTC saw record inflows on Thursday, most competing funds bled.
Investors reportedly withdrew $48.4 million from Fidelity’s Bitcoin ETF (FBTC), $22.4 million from ARK Invest’s Bitcoin fund (ARKB), $20.7 million from Bitwise’s Bitcoin fund (BITB), and $3.6 million from VanEck’s fund (HODL).
Grayscale’s Bitcoin ETF (GBTC), the second-largest Bitcoin ETF in assets under management (AUM), extended its outflow streak on Thursday. The fund reported $71.3 million drained.
Since GBTC was converted from a trust into an ETF, it has seen over $19 billion in outflows. However, compared to the initial weeks, GBTC’s outflows appear to have stabilized. As of August 1, the fund has $15,2 billion worth of Bitcoin in AUM.
Elsewhere, the Grayscale Ethereum ETF (ETHE) outflows continued on Thursday as investors pulled $78 million out of the fund, Farside’s data reveals. The fund, offering a costly 2.5% fee, has seen approximately $2 billion in outflows since it was converted into an ETF.
The spinoff of ETHE, the Grayscale Ethereum Mini Trust (ETH) , reported zero flows on Thursday. Despite that, ETH has attracted over $200 million since its debut.
Grayscale’s Strategy is Paying Off
Both the Grayscale Ethereum Mini Trust and the newly launched Grayscale Bitcoin Mini Trust feature lower expense ratios compared to Grayscale’s existing products. These funds has an expense ratio of just 0.15%, making them the cheapest exchange-traded product (ETP) in the U.S. market.
With these offerings, Grayscale aims to attract investors who are increasingly sensitive to fees, especially in a crowded market where competitors are also offering low-cost options.
“I think demand for very low-cost bitcoin exposure will find a lot of investor interest,” said Zach Pandl, Head of Research at Grayscale, in a recent interview with The Block. He added that the company was committed to client-focused product development.
“The timing of this product launch is excellent,” noted Pandl, adding the increasing mainstream attention on crypto, influenced by factors such as imminent Federal Reserve interest rate cuts and presidential election politics. These macro trends are what investors consider when owning Bitcoin, according to Pandl.
Existing investors in Grayscale’s larger funds will automatically receive shares in the new Mini Trusts. The transition not only retains current investors but also encourages them to explore the new lower-cost options. The strategy could also enhance customer loyalty and engagement.
So far, Grayscale’s strategy seems to work out and it could continue to pay off in the long run. Still, it remains unclear how the dynamics will play out in the future, especially with increasing competition from BlackRock and Fidelity.
BlackRock has moved from a previous newcomer to a dominant force in the Bitcoin ETF market after outperforming Grayscale in spot Bitcoin ETF’s AUM. As of July 1, BlackRock’s iShares Bitcoin Trust (IBIT) holds $22.5 billion worth of Bitcoin.
IBIT is one of the most successful fund in the ETF history, reaching over $10 billion in AUM within just seven weeks and being one of only 150 ETFs globally to surpass that milestone.
