Grayscale Trust Premium Hits New Low as Crypto ETFs Emerge as New "Battlefield"

Amid the recent crash in the crypto market, Grayscale's Bitcoin and Ethereum trust funds have maintained a trend of reduction, with premium rates hitting historic lows across the board. This indicates that under current market conditions, institutional attitudes toward mainstream digital assets like Bitcoin and Ethereum have undergone significant shifts. On the other hand, Grayscale continues to accumulate certain digital assets and is evaluating the addition of 25 new digital assets to its investment products. Meanwhile, numerous other crypto asset management companies have recently announced plans to launch ETFs, making digital asset ETFs appear to be the new battlefield. If crypto trusts continue to reduce holdings while maintaining negative premiums, will Grayscale also accelerate joining the ETF ranks? Given the US SEC's firm stance, what are the chances of ETF approval?

Grayscale Crypto Trust Premium Hits New Low

According to data from Kingdata, on January 21, 2022, Grayscale Bitcoin Trust's (GBTC) per-share negative premium reached 29.9%, setting a historical record. While it can be observed that since late February 2021, Grayscale GBTC has almost consistently maintained a negative premium, the trend of continuously declining negative premium rates has become particularly pronounced since last November, repeatedly reaching historic lows.

Grayscale BTC Fund Per-Share Premium Rate

Grayscale's Ethereum fund ETHE has shown a similar pattern, with ETHE's per-share premium rate reaching -27.9% on January 21. This means some investors in Grayscale's Bitcoin and Ethereum funds may face losses in the secondary market. Meanwhile, Grayscale's Bitcoin and Ethereum fund holdings continue to decline. Over the past month, the Bitcoin fund reduced holdings by 1,059 BTC, and the Ethereum fund reduced holdings by 6,395 ETH. As of January 26, Grayscale Bitcoin Fund's cumulative holdings stand at 643,900 BTC, while the Ethereum Fund's cumulative holdings total 3.11 million ETH.

Grayscale BTC Fund Cumulative Holdings

Grayscale Fund's exceptionally high negative premium rate warrants attention, as compared to the past, GBTC previously maintained very high positive premium rates (over 20%), primarily due to high investment thresholds, lock-up mechanisms, and non-redeemable features of Grayscale investment products, which created sustained strong buying demand in the secondary market, further driving up premium rates. The current negative premium indicates weak secondary market demand and a shift in attitude among mainstream and institutional investors toward mainstream assets like Bitcoin. This situation has emerged alongside the recent continuous crash in the crypto market.

As of January 28, Grayscale Investment's total assets under management stood at $32.1 billion, a decline of over 47% compared to $61 billion in early November last year. Among these, Grayscale's largest holding, the Bitcoin trust, saw its AUM drop from $43.5 billion to $23.4 billion, a 46% decline since last November, while the Ethereum trust's scale fell from nearly $15 billion to $7.5 billion, a 50% decline during this period. However, Grayscale's total AUM still grew 103% compared to one year ago, primarily due to its more diverse investment product offerings.

Mainstream Institutions Continue to "Double Down"

Although Grayscale's major trust funds maintain historically low negative premium rates, this seems not to have affected mainstream institutions' "enthusiasm" for GBTC or Grayscale's plans to launch new digital asset funds.

According to files submitted to the US Securities and Exchange Commission, Form 13F-HR shows that on January 26, North Carolina-based wealth management company Kingfisher Capital reported holding 114,350 shares of GBTC as of December 31, an increase of over 90,000 shares compared to the 20,887 shares reported in October. On January 25, Rothschild Investment, the largest holder of Grayscale Bitcoin Trust, reported that as of December 31, the company owned 232,311 shares of GBTC, an increase of 93,521 shares from the 138,790 shares reported in October.

Additionally, Morgan Stanley's three funds increased their GBTC holdings by an average of 60% in the third quarter of last year, exceeding 6.63 million shares, with the Growth Portfolio Fund adding 1.5 million shares of Grayscale Bitcoin Trust (GBTC) and Insight Fund adding nearly 600,000 shares of GBTC. Based on GBTC's primary market per-share price of $35.07, the investment bank's Bitcoin exposure is valued at approximately $230 million.

Grayscale also recently released an official announcement listing 25 digital assets "under consideration" (bolded in the image below). This list includes some digital assets not currently contained in Grayscale investment products. Grayscale has identified these digital assets and indicated that they have been determined as potential candidates for inclusion in future investment products.

Currently, Grayscale has 14 single-asset trust funds, one DeFi fund, and one large-cap trust fund encompassing multiple mainstream coins (Grayscale Digital Large Cap Fund). Grayscale stated that as the digital asset ecosystem expands, it will monitor and review more assets, adding more crypto investment products.

Crypto ETFs Emerge as New "Battlefield"

Although Grayscale's assets under management have grown rapidly since 2020, in the massive crypto fund market, Grayscale is beginning to face increasingly strong competitors. On one hand, countries like Canada and Brazil have approved several Bitcoin ETFs, gradually eroding Grayscale GBTC's market advantage. On the other hand, entering 2022, just one month in, multiple asset management companies have announced plans to launch crypto asset ETFs.

On January 13, Indian company Cosmea Financial Holdings and joint venture Kling Trading India's Torus Kling Blockchain IFSC announced signing a memorandum of understanding (MoU) with India INX to launch the country's first Bitcoin and Ethereum futures ETF. The futures ETF is expected to launch under the sandbox framework of the International Financial Services Centers Authority (IFSCA) by the end of the current fiscal year. If successfully launched, this fund would become the first futures ETF backed by cryptocurrency outside the United States. Subsequently, on January 25, San Francisco-based financial services giant Charles Schwab indicated it is considering applying for Bitcoin and crypto spot ETFs.

Beyond Bitcoin ETFs, prominent institutions are also researching and attempting to launch other types of crypto ETFs. On January 27, Fidelity Investments submitted applications to the SEC for the "Fidelity Crypto Industry and Digital Payments ETF" and "Fidelity Metaverse ETF." According to the fund's preliminary prospectus, the new crypto industry fund will primarily invest in stocks of companies "engaged in cryptocurrency, blockchain technology, and digital payment processing-related activities" included in the Fidelity index. Previously, on January 18, Brazilian crypto asset management company Hashdex announced it would launch a DeFi ETF, expected to list on Brazil's B3 stock exchange in February. The ETF will consist of 70% DeFi protocols, 15% smart contract platforms, and the remainder supported by DeFi protocols, including identity verification and scalability solutions such as Polygon (MATIC), Chainlink (LINK), and The Graph (GRT).

Of course, as the world's largest crypto asset management company, Grayscale is also committed to providing crypto ETF products to the market. Last October, Grayscale Investment LLC applied to the US Securities and Exchange Commission to convert GBTC into a Bitcoin ETF, but regulators have not approved physical Bitcoin funds. Beyond the Bitcoin trust, the ultimate goal for all of Grayscale's other crypto trust funds is to convert to ETFs.

However, the US SEC has consistently questioned digital asset ETFs, rejecting most Bitcoin ETF applications over the past few years. According to ETF.com data, there are currently over 20 Bitcoin-related ETFs awaiting approval in the US. On January 20, 2022, the US SEC rejected Skybridge Capital's spot Bitcoin ETF proposal, with reasons similar to previous statements. Late last year, the SEC successively rejected Bitcoin ETF proposals from investment companies Kryptoin, Van Eck, and Wisdom Tree. Meanwhile, it continuously approved three Bitcoin futures ETFs launched by Van Eck, ProShares, and Valkyrie.

In response, Grayscale also stated its position. Last November, GBTC operator sent a letter to US SEC Secretary Vanessa Countryman, stating that the US SEC "has no basis to suggest that investors can accept investing in derivatives markets of an asset while not accepting investing in the asset itself," and that futures and spot Bitcoin ETF products should be treated equally.

This "counterattack" reflects Grayscale's firm determination to convert Bitcoin to a Bitcoin ETF, but given the US SEC's consistent rejection of digital asset spot ETFs, Grayscale's ETF conversion plan faces numerous obstacles. However, it can be predicted that if Bitcoin spot ETFs are approved, Wall Street "whales" holdings of Bitcoin would surge to another level.

Disclaimer

This article may contain product-related content not applicable to your region. This article is intended to provide general information only and does not accept responsibility for any factual errors or omissions herein. This article represents only the author's personal views and does not represent the views of OKX. This article is not intended to provide any advice, including but not limited to: (i) investment advice or investment recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins) involves high risk, may fluctuate significantly, and even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For questions about your specific situation, please consult your legal/tax/investment professional. Information appearing in this article (including market data and statistics, if any) is for general reference only. While we have taken all reasonable precautions in preparing these data and charts, we accept no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in full, or excerpts of 100 words or less from this article may be used, provided such use is non-commercial. Any reproduction or distribution of the entire article must prominently state: "This article copyright © 2025 OKX, used with permission." Permitted excerpts must cite the article name and include attribution, for example "Article Name, [Author Name (if applicable)], © 2025 OKX". Some content may be generated or assisted by artificial intelligence (AI) tools. Derivative works or other uses of this article are not permitted.