Ultimately, he adds, the goal for all of these products is to provide liquidity for their investors through potential public quotation on the OTC marketplace.
Other than GBTC, the only other Grayscale trust currently trading on the OTC market is the Grayscale Ethereum Classic Trust (ETCG).
Bitcoin: Buzz, Or Bust
As referenced, bitcoin’s price has gone belly up since its all-time high of almost $20,000 on December 17, 2017. It ended trading on Thursday at $3,419. Not surprisingly, both Beck and Murphy strongly believe it has a bright future.
“It’s an early-stage, nascent yet potentially disruptive technology,” Beck says. “From a fundamental perspective we see continued adoption. But as a nascent and risky asset class it comes with volatility.”
“We’ve had about five 80-percent drawdowns since bitcoin was founded 10 years ago,” Murphy says. “But the other four were less well-known because there wasn’t as much media attention back then. Clearly there was a bubble at the end of 2017. There’s a lot of fixation in the popular media around price, but the reason why people are excited about bitcoin is because of the underlying technology. We still feel very good about it as an investment opportunity because it’s a breakthrough that enables the instant transfer of something of value without an intermediary.”
Bitcoin—and digital currencies in general—still have many diehard fans. And eventually the SEC will likely approve one or more bitcoin ETFs when it’s satisfied that any such product offers the proper investor protections.
Bitcoin ETFs will probably be less costly than GBTC with its 2 percent fee. Is Grayscale worried that GBTC—and perhaps the private-placement bitcoin trust—will bleed assets if and when the SEC approves a bitcoin ETF?
Murphy wouldn’t directly comment, but he did pass along an emailed statement: “We are unable to comment on the impact or status of SEC approval of an ETF, but we maintain a constructive dialogue with all relevant regulators.”