Grayscale GBTC plunges more than 11% due to split into Mini Bitcoin Trust BTC

The Grayscale Bitcoin Trust (GBTC) plunged more than 11% yesterday, causing market panic at one point. Even Bloomberg analyst James Seyffart came out to explain that this was due to a 10% split of GBTC into the Mini Trust BTC.

GBTC Splits 10% to Grayscale BTC Mini Trust

Grayscale filed for a mini version of its Grayscale Bitcoin spot ETF, Grayscale Bitcoin Mini Trust, BTC, with the SEC back in March, but only recently received approval. Yesterday marked the record date for the GBTC split, with 10% of the underlying Bitcoin in the Grayscale Bitcoin Trust "GBTC Trust" being split off into the Grayscale Bitcoin Mini Trust BTC. As a result, the net asset value of GBTC shares dropped by 10% from the previous day, without considering the fluctuations in Bitcoin's price.

As illustrated in the chart below, if GBTC was originally priced at $10 per share, and person A purchased 10 shares, the total investment would be $100. After the split, they would hold GBTC at $9 per share and BTC at $1 per share, with the total investment still amounting to $100, regardless of Bitcoin's price fluctuations. Person A does not need to take any action during this process, as the new BTC shares will enter their trust account within a few days.

BTC Fees Reduced to 0.15%

The well-established Grayscale Bitcoin Trust GBTC previously had a fee of 1.5%, significantly higher than the 0.25% fees of most competitors, leading to a continuous outflow of funds after the launch of the Bitcoin spot ETF. By introducing the mini version of the Bitcoin spot ETF, BTC, the fees have been significantly reduced to 0.15%, in an attempt to regain investor favor.

With the current asset size of GBTC at $16 billion, there has been an outflow of $18.9 billion since the launch of the Bitcoin spot ETF in January, with over half of the funds lost. Will the listing of the mini BTC, along with the price reduction promotion, help in the recovery of Grayscale Trust's assets?