In a significant development for the cryptocurrency space, Grayscale’s newest Bitcoin (BTC) exchange-traded fund (ETF) has seen more than $1 billion in net inflows in 2024. According to a statement made by Grayscale to Cointelegraph on December 17, this is a testament to the growing demand for low-cost cryptocurrency products.
Grayscale Bitcoin Mini Trust: A Low-Cost Alternative
As of December 17, the Grayscale Bitcoin Mini Trust manages over $4 billion in assets. This fund was spun out from Grayscale’s older BTC fund, the Grayscale Bitcoin Trust (GBTC), which charges a management fee of 1.5%. The new Mini Trust has a significantly lower management fee of 0.15%, making it an attractive option for investors looking to gain exposure to Bitcoin.
The Rise of Low-Cost Crypto ETFs
In July, Grayscale spun out two new ETFs: the Grayscale Bitcoin Mini Trust and the Grayscale Mini Ethereum (ETH) Trust. These funds were separated from their older counterparts, which had higher management fees. This move was likely aimed at catering to investors who prefer lower-cost options.
"We’re seeing a strong demand for low-cost crypto ETPs," said John Hoffman, Grayscale’s managing director and head of distribution and partnerships, in an interview with Cointelegraph in October. "The success of BTC and ETH to-date is emblematic of this trend."
Fee Wars in the Crypto ETF Space
The launch of spot BTC and ETH ETFs in January and July sparked a fee war among fund issuers vying for investor inflows. Most newly launched spot crypto ETFs temporarily waived or discounted fees, typically from six months to one year.
In November, VanEck extended the fee waiver for its VanEck Bitcoin ETF in an effort to attract more investors. Spot crypto ETFs generally charge shareholders between 0.15% and 0.25% of assets under management each year.
Grayscale’s GBTC and ETHE: Outliers in the Fee Landscape
Grayscale’s GBTC and ETHE are outliers, charging management fees of 1.5% and 2.5%, respectively. This is significantly higher than the fees charged by most other spot crypto ETFs.
The Dominance of Bitcoin ETFs
Since the launch of spot BTC ETFs in January, Bitcoin has dominated the ETF landscape. United States spot BTC ETFs broke $100 billion in net assets for the first time in November, according to data from Bloomberg Intelligence.
Beyond Bitcoin: Grayscale’s Alternative Funds
Grayscale also manages a suite of alternative cryptocurrency funds, some of which may become ETFs in 2025. In October, the company launched an investment fund for Aave’s governance token, AAVE. In August, Grayscale launched three trusts to invest in the native protocol tokens of Sky (previously MakerDAO), Bittensor, and Sui.
Proposed Crypto Funds: A Look Ahead
In anticipation of the upcoming presidential term of Donald Trump, issuers are seeking to list a variety of proposed crypto funds, including index ETFs and ETFs offering staking. The Grayscale Digital Large Cap Fund, which would hold a diverse portfolio of cryptocurrencies, has been proposed for listing by NYSE Arca.
Conclusion
Grayscale’s Bitcoin Mini Trust has seen significant inflows in 2024, with over $1 billion in net inflows as of December 17. This is a testament to the growing demand for low-cost cryptocurrency products and the increasing popularity of spot crypto ETFs. As the regulatory landscape continues to evolve, investors can expect to see more innovative and cost-effective solutions emerge in the crypto space.
Sources:
- Grayscale
- Cointelegraph
- Bloomberg Intelligence
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- The Rise of Spot Crypto ETFs: A Look at the Growing Market