Recently, Grayscale made headlines by launching the Grayscale MakerDAO Trust, a fund focused on MKR, MakerDAO’s governance token. Within an hour of the announcement, MKR’s price surged over 5%, crossing $2,100 with a 14.7% weekly gain.
This follows Grayscale’s introduction of the Grayscale Bittensor Trust and Grayscale Sui Trust last Wednesday. Both TAO and SUI defied market volatility, rallying for nearly a week. SUI broke the $1 mark, soaring 65% in 7 days and repeatedly topping ChainCatcher’s trending projects list.
In July, Grayscale also debuted the Grayscale Decentralized AI Fund, investing in AI tokens like TAO, FIL, LPT, NEAR, and RNDR. The announcement triggered a sector-wide rally, with each token gaining over 5% shortly after.
The "Grayscale Effect" is back.
The Bitcoin Whale’s Legacy
Once dubbed the "Pixiu" (a mythical coin-hoarding creature) of Bitcoin, Grayscale’s massive accumulation strategy captivated the crypto market. Some even credited the 2020–2021 bull run to the "Grayscale Bull," as its relentless buying pressure propelled BTC prices.
This golden era lasted two years. After navigating the liquidity crisis post-FTX collapse (2022–2023) and a protracted legal battle with the SEC over converting GBTC into a spot ETF, Grayscale now enjoys relative calm.
Post-ETF Accelerated Expansion
Since Bitcoin and Ethereum spot ETFs launched this year, Grayscale has ramped up new fund offerings. Its product page reveals that nearly all pre-2022 trusts—like those for Solana, Litecoin, and Chainlink—have been joined by recent additions. The firm is also hiring an ETF Product Senior Associate to bolster its ETF division.
👉 Explore Grayscale’s latest ETF opportunities
What Did Spot ETFs Change for Grayscale?
As a key advocate for Bitcoin spot ETFs, Grayscale and GBTC found redemption. However, the transition also invited fierce competition from traditional asset managers like BlackRock and Fidelity.
- GBTC has shed over 380,000 BTC since its January ETF conversion, now holding 232,792 BTC.
- BlackRock leads with 348,165 BTC (surpassing Grayscale in May), while Fidelity holds 176,656 BTC, ranking third.
Revenue from GBTC and ETHE peaked after Grayscale’s August 2023 SEC lawsuit win but declined post-ETF conversion.
Fee structure:
- GBTC: 2% (pre-ETF) → 1.5% (ETF)
- ETHE: 2.5% annually
Grayscale’s Evolution: A Timeline
- 2013: Founded by Barry Silbert, launching the Bitcoin Trust.
- 2015: GBTC listed on OTC markets with a non-redemption clause.
- 2017–2021: Diversified into Ethereum, Solana, and other altcoin trusts.
- 2022–2023: Survived the FTX fallout and won the SEC lawsuit to convert GBTC to an ETF.
👉 Discover Grayscale’s strategic moves
The Mechanics of the "Grayscale Effect"
Institutional demand for GBTC—a rare regulated product—created a 20% average premium. Investors exploited this by:
- Buying BTC → depositing into Grayscale → exchanging for GBTC shares.
- Selling shares at a premium post-lockup.
Notable players like BlockFi and Three Arrows Capital leveraged this until the premium vanished in 2021, triggering collapses.
ETF Victory and New Challenges
After SEC denials, Grayscale sued in 2022, winning in August 2023. The court mandated SEC review, paving the way for spot ETFs. This also enabled BlackRock and Fidelity to enter, reshaping crypto asset management.
Grayscale’s Counterstrategy
- Launched 6 new trusts in 3 months.
- Exploring European expansion (April 2024).
- Total holdings: $21.35 billion across 21 trusts and 5 ETFs.
FAQs
Q: Why did GBTC’s premium disappear?
A: Increased competition and ETF conversion eliminated scarcity-driven premiums.
Q: How does Grayscale plan to compete with BlackRock?
A: Accelerating new fund launches and reducing fees (e.g., GBTC’s fee drop to 1.5%).
Q: What tokens are next for Grayscale trusts?
A: Recent additions like MKR and SUI suggest a focus on AI and DeFi sectors.
Conclusion
Grayscale’s ETF victory revived its market influence, but sustaining dominance requires innovation amid rising competition. The resurgence of the "Grayscale Effect" with MKR and SUI shows investor confidence persists—yet fee adjustments and global expansion will be critical.
Disclaimer: This content is for informational purposes only and does not constitute investment advice.