Grayscale Bitcoin ETF (GBTC) Plummets 11% Ahead BTC Mini Trust Distribution

Grayscale’s Bitcoin ETF (GBTC) experienced a significant drop of over 11% in the trading session today. This dip coincides with the record date for the spinoff of its new Bitcoin Mini Trust. The sharp decline in GBTC’s value marks a pivotal moment as investors react to the forthcoming transfer of a portion of GBTC’s BTC holdings to the newly established trust.

Grayscale Bitcoin ETF Plunged 11%

According to Yahoo Finance, the GBTC price slumped 11.42% to $52.87 in the trading session on Tuesday, July 30. This comes amid accelerated outflows from the Grayscale Bitcoin ETF as it recorded a $54.3 million negative flow on Monday. Moreover, the negative sentiment has led to a loss of investor confidence amid the Mini Trust distribution.

James Seyffart, a Bloomberg analyst, provided insight into the mechanics of the spinoff. He clarified that the 11% value decline in GBTC reflects the anticipated shift of assets into the Bitcoin Mini Trust. Seyffart emphasized the importance of the record date, which is today, and indicated that trading for BTC is expected to commence tomorrow, pending final approvals from the SEC.

“We are expecting $BTC to begin trading tomorrow. But there are still final ‘approvals’ from the SEC that are necessary,” Seyffart noted. Earlier this week, Nate Geraci, president of The ETF Store, confirmed that the SEC has indeed given the green light for Grayscale’s Bitcoin Mini ETF.

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Grayscale BTC Mini Trust Distribution

The new fund, with the ticker BTC, is set to debut as a spinoff of GBTC, fueling anticipations in the cryptocurrency market. The transfer involves GBTC shifting a certain percentage of its Bitcoin holdings to the new trust, effectively distributing new shares of BTC to GBTC shareholders. This distribution aims to streamline market operations and improve pricing accuracy for the trust’s shares.

The Grayscale Bitcoin Mini Trust will follow a similar management fee structure as the Grayscale Ethereum Mini Trust. Hence, it set a nominal fee set at 15 basis points. A crucial aspect of this transition is the registration statement on Form S-1 for the BTC Trust.

Grayscale is awaiting the SEC’s final approval of this document, which is essential for the legal and regulatory authorization of the trust’s shares to be offered to the public. This step is critical as it ensures compliance with regulatory standards and facilitates the trust’s operations within the public market.

Currently, the record date for the initial distribution of Bitcoin Mini Trust shares is established for today, July 30, 2024. Thereafter, the 10% distribution is expected to occur the following day. Grayscale’s BTC ETF shareholders of record as of the close of business today will receive a one-for-one distribution of new shares in the Bitcoin Mini Trust. This means that each GBTC shareholder will gain an equivalent number of BTC shares, reflecting their current holdings in GBTC.

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