Grayscale Investments, understood for its Grayscale Bitcoin Trust (GBTC), is intending on submitting an application to transform its flagship fund into a spot ETF early next week. Grayscale, which has been the dominant player in the digital asset space, is now looking to revamp its fund due to competition.
First Bitcoin Futures ETF Set to Trade Early Next Week, Adding More Competition for Grayscale
Last Friday, the Securities and Exchange Commission (SEC) authorized the very first Bitcoin futures ETF, which is set to trade on the New York Stock Exchange early next week. The move has been hailed as a “watershed moment” by many, where Bitcoin is finally solidifying its legitimacy as an asset class to Wall Street and mainstream investors.
The ETF, handled by financial investment company ProShares, will include a low management charge of 0.95%, compared to Grayscale’s 2%. Another benefit that the new ETF provides is the lack of redemption periods – something that has plagued GBTC’s investors since its very inception.
Why Grayscale’s Potential Spot Bitcoin ETF May Outperform Futures ETFs
The Bitcoin-futures ETF is an action in the best instructions in making cryptocurrencies more available for the daily financier; nevertheless, numerous crypto financiers have actually argued that the ETF’s usage of acquired agreements, which are traded on the Chicago Mercantile Exchange (CME), would show to be far inferior compared to a spot ETF holding real Bitcoin.
Contango, which is a phenomenon that occurs when futures prices are above expected future spot price, means that investors will lose out potential gains due to the Bitcoin futures contracts expiring higher than the cryptocurrency’s spot price. Joe Orsini, director of research study at Eagle Brook Advisors, discussed the following downsides in his Twitter thread:
If approved, Grayscale’s spot Bitcoin ETF would be backed by actual Bitcoins, rather than derivatives that track the cryptocurrency’s price. Grayscale currently has a considerable part of the world’s distributing Bitcoin supply.
Barry Silberts, the founder of Digital Currency Group and Grayscale Investments, took to Twitter to hint at upcoming changes for GBTC. He joked, “[f]riends don’t let friends buy and hold futures-based ETFs.” Though, there might be some fact behind the declaration yet.
