By
Bena Ilyas
May 13th, 2024
This strategic pivot by Patient Capital Management indicates a broader investment approach, now including all exchange-traded products (ETPs), moving away from its previous exclusive focus on the Grayscale fund.
On Monday, March 11, leading asset management firm Patient Capital announced a major pivot of its investment from the Grayscale Bitcoin Trust (GBTC) to the Bitcoin Exchange Traded Products (ETPs). Patient Capital disclosed this development in its filing submitted to the US Securities and Exchange Commission.
As part of the update, the company revised its prospectus, replacing “Bitcoin risk” with “cryptocurrency regulatory risk” to reflect evolving regulatory concerns. Furthermore, in its filing with the SEC, Patient Capital noted:
“Effective immediately, the Fund may seek exposure to bitcoin by investing up to 15% of its net assets in exchange traded products that are registered under the Securities Act of 1933 and invest primarily in bitcoin (‘Bitcoin ETPs’). Therefore, all references to Grayscale Bitcoin Trust throughout the Prospectus and Statement of Additional Information are replaced with references to Bitcoin ETPs.”
This strategic shift from Patient Capital Management also shows that it aims to broaden its investment scope to encompass all exchange-traded products (ETPs), a departure from its previous focus solely on the Grayscale fund.
As outlined in the latest filing, the management intends to allocate up to 15% of its capital towards BTC ETPs. With assets under management (AUM) totaling $1.4 billion as of December 31, 2023, the potential BTC investment could exceed $200 million. Thus, it appears that the fund may adopt a HODLing strategy for its BTC holdings. “In this market, we believe volatility is the price you pay for long-term returns,” it noted.
In its filing, Patient Capital Management acknowledged the inherent risk associated with fluctuations in the price of BTC. It also expressed awareness that certain countries, including the US, may consider restricting or even prohibiting the acquisition, use, or sale of bitcoin in the future.
Grayscale Bitcoin Trust Selling
On March 11, Grayscale submitted an S-1 form to the SEC for the registration of a new “mini” version of its exchange-traded fund (ETF). As per Bloomberg analyst James Seyffart, the aim of the new fund was to offer tax advantages.
Amid escalating competition for investors, Grayscale finds itself facing a growing disadvantage due to its comparatively high annual management fee of 1.5%. For instance, VanEck revealed on March 11 its decision to waive sponsor fees on the initial $1.5 billion of funds in its Bitcoin Trust ETF until March 31, 2025.
$GBTC has seen 2nd most outflows of any ETF in the last 15yrs cumulatively.. Only $EEM has seen more (which is interesting bc that's the ETF that inspired BlackRock to invent the mini-me move with $IEMG which Grayscale is doing w $BTC and $GLD did with $GLDM) via @Todd_Sohn pic.twitter.com/i7IZJHtoc9
— Eric Balchunas (@EricBalchunas) March 12, 2024
In a recent observation by Bloomberg’s ETF strategist Eric Balchunas, it has been revealed that the Grayscale Bitcoin Trust ($GBTC) has experienced substantial outflows, ranking as the second highest among Exchange-Traded Funds (ETFs) over the past 15 years in cumulative outflows. Balchunas compares this notable trend, indicating that only the iShares MSCI Emerging Markets ETF ($EEM) has witnessed higher outflows during this period.