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Here’s What To Know On Grayscale Bitcoin & Ethereum ETF Spinoffs – Details

Semilore Faleti
Semilore Faleti
9 months ago
3 mins read
Grayscale

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Prominent asset manager Grayscale Investments is set to launch spinoffs of their Grayscale Ethereum Trust’s (ETHE) and Grayscale Bitcoin Trust (GBTC) exchange-traded funds (ETF). Following inquiries by market spectators and potential investors, Bloomberg analyst James Seyffart has provided much insight into the nature and operation of these spinoffs.

Grayscale ETF Spinoff Based On 90-10% Sharing Format, Seyffart Says

On Friday, James Seyffart published a thread on social media platform X, discussing vital information about Grayscale’s ETF spin-offs Grayscale Ethereum Mini Trust (ETH) and Grayscale Bitcoin Mini Trust (BTC), which are based on the company’s ETHE and GBTC’s funds respectively.

Related Reading: BlackRock Overtakes Grayscale To Become The Largest Bitcoin Fund In The World With $20 Billion AUM

An ETF spinoff occurs when a portion of an ETF’s holdings is separated into a new, independent ETF. In this process, shareholders of the original ETF, i.e. EHTE and GBTC, automatically receive shares of the new ETF, i.e. ETH and BTC. However, the amount each shareholder receives is proportional to their holdings in the original ETF and the sharing formula of the spinoff.

 

Doing a thread on the situation for @Grayscale's spinoff for $ETHE & $ETH because I've gotten about a million questions on it. The mechanics will be essentially the same for $GBTC & $BTC spinoff. If you own 1,000 shares of $ETHE, you should receive 1,000 shares of mini $ETH. 1/ pic.twitter.com/Er66mj5L46

— James Seyffart (@JSeyff) July 19, 2024

 

Seyffart explains that Grayscale spinoffs are based on the same mechanics, whereby if you have 1000 shares of ETHE or GBTC,  you will receive 1000 shares of ETH or BTC.  Nevertheless, in terms of value, Seyffart states that an initial $1000 worth of ETHE or GBTC will decrease to $900, while the shares in the new ETFs accumulate a value of $100, implying that Grayscale is employing a 90-10% sharing formula. 

Furthermore, the Bloomberg analyst highlighted that the spinoff for ETHE is programmed for July 23, while that of GBTC will occur on July 31.  However, to be eligible for share distributions from the new ETFs, investors should have purchased shares in these original funds before or on the record dates for these spin-offs, which are July 18th for ETHE and July 30 for BTC. Thereafter, investors will have to purchase shares of ETH as a separate, independent fund.

Seyffart notes the record date for ETHE is already past, stating the low price of the ETF at the start of trading was due to the spinoff process on that day. The analyst warns investors to anticipate a similar fate for GBTC on July 30.

Importance Of Grayscale’s ETF Spinoffs

Spinoffs are generally conducted for various reasons but with the aim of satisfying a more focused demand. According to Grayscale, their latest spinoffs aim to offer investors the choice of buying a similar product but at lower fees. For context, the proposed ETH spin-off will be accompanied by a sponsor fee of only 0.15% which is quite low in comparison to ETHE’s 2.5% fee.

Related Reading: Related Reading: Bitwise CIO Bullish On Ethereum ETFs Fueling Surge To Record Highs Above $5,000

Currently, both ETHE and GBTC continue to trade at $29.71 and $59.68, respectively, with a market gain of 3.31% and 5.82% in the last 24 hours.

Grayscale
GBTC trading at $59.68 on the daily trading chart | Source: GBTC chart on Tradingview.com
Featured image from The Economic Times, chart from Tradingview
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Semilore Faleti
Semilore Faleti

Semilore Faleti

Semilore Faleti is a cryptocurrency writer specialized in the field of journalism and content creation. While he started out writing on several subjects, Semilore soon found a knack for cracking down on the complexities and intricacies in the intriguing world of blockchains and cryptocurrency.

Read more

Semilore is drawn to the efficiency of digital assets in terms of storing, and transferring value. He is a staunch advocate for the adoption of cryptocurrency as he believes it can improve the digitalization and transparency of the existing financial systems.

In two years of active crypto writing, Semilore has covered multiple aspects of the digital asset space including blockchains, decentralized finance (DeFi), staking, non-fungible tokens (NFT), regulations and network upgrades among others.

In his early years, Semilore honed his skills as a content writer, curating educational articles that catered to a wide audience. His pieces were particularly valuable for individuals new to the crypto space, offering insightful explanations that demystified the world of digital currencies.

Semilore also curated pieces for veteran crypto users ensuring they were up to date with the latest blockchains, decentralized applications and network updates. This foundation in educational writing has continued to inform his work, ensuring that his current work remains accessible, accurate and informative.

Currently at NewsBTC, Semilore is dedicated to reporting the latest news on cryptocurrency price action, on-chain developments and whale activity. He also covers the latest token analysis and price predictions by top market experts thus providing readers with potentially insightful and actionable information.

Through his meticulous research and engaging writing style, Semilore strives to establish himself as a trusted source in the crypto journalism field to inform and educate his audience on the latest trends and developments in the rapidly evolving world of digital assets.

Outside his work, Semilore possesses other passions like all individuals. He is a big music fan with an interest in almost every genre. He can be described as a “music nomad” always ready to listen to new artists and explore new trends.

Semilore Faleti is also a strong advocate for social justice, preaching fairness, inclusivity, and equity. He actively promotes the engagement of issues centred around systemic inequalities and all forms of discrimination.

He also promotes political participation by all persons at all levels. He believes active contribution to governmental systems and policies is the fastest and most effective way to bring about permanent positive change in any society.

In conclusion, Semilore Faleti exemplifies the convergence of expertise, passion, and advocacy in the world of crypto journalism. He is a rare individual whose work in documenting the evolution of cryptocurrency will remain relevant for years to come.

His dedication to demystifying digital assets and advocating for their adoption, combined with his commitment to social justice and political engagement, positions him as a dynamic and influential voice in the industry.

Whether through his meticulous reporting at NewsBTC or his fervent promotion of fairness and equity, Semilore continues to inform, educate, and inspire his audience, striving for a more transparent and inclusive financial future.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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