Grayscale’s Bitcoin Mini Trust Launches with Unprecedentedly Low Fees

Grayscale has officially launched its Bitcoin Mini Trust, a new low-cost investment vehicle for Bitcoin exposure. Approved by the US Securities and Exchange Commission (SEC), the Grayscale Bitcoin Mini Trust debuted with an expense ratio of just 0.15%, making it the lowest-cost Bitcoin exchange-traded product (ETP) available in the US market. This expense ratio surpasses even the recently introduced Bitcoin ETFs from major players like BlackRock and Fidelity.

The mini-trust has been seeded with 10% of the assets from Grayscale’s largest fund, the Grayscale Bitcoin Trust (GBTC), which transitioned to an ETF structure in January 2023 after operating as a closed-end investment product for over a decade.

Market Context and Timing

Zach Pandl, Grayscale’s head of research, noted the favorable timing for this launch. He highlighted the Federal Reserve's anticipated rate cuts and the increasing significance of crypto in the US presidential election, where the Trump platform’s potential stance on dollar weakness could impact investor portfolios.

Existing GBTC investors will automatically receive shares of the Bitcoin Mini Trust on a pro-rata basis, providing them with a more cost-effective investment option.

Competitive Landscape

The launch of the Grayscale Bitcoin Mini Trust comes amidst a competitive landscape for Bitcoin and Ethereum ETFs. Issuers have aggressively competed on fees, with some offering zero-fee products temporarily to attract assets. Despite this, the Grayscale Bitcoin Trust remains the second-largest Bitcoin fund, following BlackRock’s iShares Bitcoin Trust, which has amassed $20 billion in assets since its January listing.

Conversely, GBTC has experienced nearly $19 billion in outflows since its transition to an ETF structure and trading earlier this year, alongside other Bitcoin ETFs.

Ethereum ETF Developments

The US market has also seen expansion in Ethereum ETFs, with nine spot Ethereum funds approved by the SEC in July. On Tuesday, these funds experienced a combined $33.67 million in net inflows, ending a four-day streak of outflows. However, the Grayscale Ethereum Trust (ETHE) saw a $120.28 million outflow, contrasted by strong inflows into products such as BlackRock’s ETHA, which gained $117.98 million.

Grayscale has introduced the lower-fee Ethereum Mini Trust (GEMP), which has attracted $181 million in net inflows, while $1.8 billion has exited the higher-fee Grayscale Ethereum Trust.