Summary Grayscale launched BTC Mini Trust on July 30, 2024, carving out 10% of Bitcoin from GBTC with a lower fee ratio of 15bps. BTC offers a lower price per share compared to GBTC, making it appealing to retail investors with smaller accounts. Despite similarities in strategy, BTC may face liquidity challenges compared to IBIT due to lower volumes and AUM, making IBIT a potentially better investment option. Grayscale launched their BTC Mini Trust ( BTC ) on July 30, 2024, which is said to be a spin-off of their larger trust, the Grayscale Bitcoin Trust ( GBTC ). 10% of the Bitcoin held in GBTC was carved out in order to be held by the mini trust, BTC, with GBTC retaining the remaining 90%. Corporate Reports You can find additional research on alternative bitcoin ETFs here: BRRR Has The Cold Storage Appeal BITU May Be Too Risky At 2x Leverage IBIT Is A Great Vehicle For BTC Investing VanEck Bitcoin Trust ETF May Not Be The Optimal Bitcoin Fund To 'HODL' The two trusts are essentially the same with one major difference that may drive appeal. Both funds hold the same strategy: a passive investment vehicle for investing in bitcoin. The major difference is the fee. BTC has a gross expense ratio of 15bps, significantly lower than GBTC’s expense ratio of 1.50%. I believe this is what drove the carve-out of BTC as the legacy trust has been struggling to compete with bitcoin ETFs as a result of the January 10, 2024 SEC approval of bitcoin spot ETFs . Given that Grayscale is no longer the only player on the block, the fund manager was forced to create a competitive trust to retain their asset level. btcetffundflow.com Another benefit BTC holds is the low price per share. This factor may make the fund more appealing to retail investors with smaller brokerage accounts that wish to gain exposure to bitcoin while being more precise on their percentage holdings. One share of BTC as of the close on August 7, 2024, was $4.86. This compares to the share price of GBTC of $43.67 or iShares bitcoin ETF ( IBIT ) at $31.19. What’s interesting is the daily performance difference between the three funds, in which IBIT’s daily performance was -3.56%, GBTC was -3.64%, and BTC was -3.76%. Seeking Alpha Volumes traded between the two Grayscale funds were similar at just north of 4mm while IBIT had volumes of 24mm. These factors suggest that Grayscale may have a less liquid market when compared to IBIT, which has $19b AUM, dwarfing GBTC’s $13b and BTC’s 1.75b. Given the price volatility of bitcoin, I believe it would be prudent to invest in the more liquid market, IBIT. This assumes the investor does not have size constraints and pays no mind to the $4.86/share appeal. BTC currently holds 30,792 bitcoins in the trust, as compared to GBTC’s holdings of 237,497 bitcoins. For reference, IBIT holds 344k bitcoins within their ETF wrapper . According to Grayscale’s website , BTC is structured as a trust as opposed to an ETF or ETP and is not required to register under the Investment Company Act of 1940. Performance between GBTC and bitcoin differ slightly, potentially due to GBTC having fewer trading volumes, resulting in a premium to the underlying assets. Given BTC’s limited time as an investment vehicle, premium/discount cannot be appropriately analyzed. Given the lower management fee and lower price per share, I suspect that smaller retail investors seeking to actively trade bitcoin will elect to trade BTC over GBTC or IBIT. Given this factor, I believe BTC may potentially hold a higher premium/discount as the trust gains more visibility in the market. TradingView Conclusion BTC was a spin-off from GBTC on July 30, 2024, providing a low-dollar vehicle for retail investors to gain exposure to bitcoin. Though BTC’s expense ratio is significantly lower than GBTC, BTC remains more expensive than competing ETF IBIT. Given that the two funds hold the same objective, I cannot recommend BTC over IBIT. Given this factor, I will provide BTC with a HOLD recommendation.
