Grayscale Investments, which most people know for launching the wildly popular Grayscale Bitcoin Trust (GBTC), is launching a new altcoin fund. Grayscale is known as the largest digital asset management firm in the world, with their publicly traded GBTC fund peaking at $60B. It currently sits at $26B due to the drop in Bitcoin price.
The new fund is called the Grayscale Smart Contract Platform Ex-Ethereum Fund (GSCPxE), and includes many major smart contract projects, minus Ethereum. The current holding as of 3/16 are:
- Cardano (ADA): 24.63%
- Solana (SOL): 16.96%
- Avalanche (AVAX): 16.96%
- Polkadot (DOT): 16.16%
- Polygon (MATIC): 9.65%
- Algorand (ALGO): 4.27%
- Stellar (XLM): 4.06%
This seems like a great way to invest in the market, right? There’s one big problem that’s not immediately obvious: this is not a spot fund. Spot funds directly track the value of the underlying assets. GBTC has been dismissed by many in the crypto community because it is not spot, and has traded at as high as 25% discounts to Bitcoin. The GBTC price also drops faster than the BTC price. Though, Grayscale is not to blame for this, since the SEC has denied their request to convert GBTC to a spot ETF. Grayscale has even requested that investors make a comment to the SEC.
Even with the asset price tracking differences, or perhaps because of the discount, institutional investors are buying up GTBC. GBTC may be a good way for institutional investors to get exposure to Bitcoin at a discount, and if they expect the SEC to approve plans to convert GBTC pricing to spot pricing, they could see as much as a 30% increase in value. In recent months, we’ve seen as much as $140M of net buying of GBTC in the last week of February.