Canada’s Purpose Bitcoin ETF may be cutting into Grayscale’s market share

For the first time, shares of Grayscale’s bitcoin trust have traded below BTC’s spot price for a month.

Raphael Schulze-Kraft, CTO of online analytics provider Glassnode, shared this observation on Twitter on April 1, noting that the fund manager’s Bitcoin Trust shares traded at a conditional discount of -6% on average in March.

He noted that Grayscale’s downgrade of BTC shares coincided with the launch of a bitcoin-focused ETF in Canada, which has amassed 16,000 BTC worth about $940 million since its launch in late February.

3/ $GTBC premium falls with launch of targeted #Bitcoin ETF – which could drive investments away from GBTC.

The ETF has accumulated more than 16 thousand in a month. BTC. (Still overshadowed by the £654 BTC stock on Grayscale).

Chart: https://t.co/o0AtdTEQsD pic.twitter.com/AGINo51TMy

– Rafael Schulze-Kraft (@n3ocortex) April 1, 2021

Glassnode’s CTO isn’t the only one suggesting that the launch of the first bitcoin ETF in North America could swallow up a Grayscale institution, as a tweet from Galaxy Digital’s Mike Novogratz shows:

It was the only game in town. Now we have an ETF in Canada that takes 40p. And here in the U.S., there are many foundations with very low-paying structures.

Two bitcoin and crypto-ETFs were also approved by Brazil’s Securities and Exchange Commission earlier this month.

Schulze-Kraft noted that the holdings of the Bitcoin Trust have not changed in recent weeks: This is not surprising, as there is no point in subscribing to new $GBTC shares as long as existing shares are trading at a discount.

Grayscale allows accredited investors to create baskets of shares representing BTC or other digital assets by depositing fiat. Gray Scale then places an equivalent amount of cryptocurrency into its trusts, with investors having a six-month lock-in period after which they can sell their shares on the over-the-counter or OTC markets.

Because Grayscale’s shares have historically traded at a premium to cryptocurrency markets, many institutional investors invested in the trust as an arbitrage play, speculating that a large spread would offset the 10 percent holding and interest costs associated with the six-month lockup period.

Grayscale now has $45.6 billion in assets under management in 13 trusts following the launch of five new trusts last month. New trust Decentraland (MANA) hits $17.4 million, followed by Livepeer (LPT) at $12.3 million, Filecoin (FIL) at $8.5 million, Basic Attention Token (BAT) at $3.7 million and Chainlink (LINK) at $3.5 million.

While all of Grayscale’s new guaranteed assets have experienced significant growth in recent weeks, Filecoin’s performance led the list last week with 105% growth, according to CoinMarketCap.

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