- The new BlackRock product will be traded on the open market
- And allow more effective control over the price of the asset
Financial heavyweight BlackRock last week applied to launch the ETF Spot Bitcoin. It will allow the largest investment firm to bring BTC to Wall Street. However, a similar product is already offered by the Grayscale Foundation. In this regard, many people ask what is the difference between them. Expert Helen Brown responded.
The main difference is the possibility of share repurchases. BlackRock calls its product Bitcoin iShares. Technically, it is a mutual fund that allows you to buy shares like an ETF.
The Grayscale company offers a GBTC trust product. It has no redemption function. The number of such assets is limited and not traded on the free market.
Mutual fund shares usually trade at a premium or discount to the net asset value of the underlying assets. This means that the price of the trust may not equal the value of the assets in which it invests. That’s what we see in the case of GBTC. For several months now, it has been trading at a discount of about 40% to its intrinsic value. That is, the price of GBTC is 40% lower than the price of bitcoin.</nbsp;
On the other hand, an ETF is a public mutual fund with a listing on an exchange. It is designed to track the performance of an index or asset class. ETFs typically have the ability to create new stocks or eliminate existing stocks in the secondary market. This helps bring the fund’s rate in line with the value of the underlying asset. That is, the price of such instruments will roughly equal the BTC exchange rate.