Grayscale, the Bitcoin ETF giant, has recently introduced a new fund dedicated to crypto staking. In particular, the Grayscale Dynamic Income Fund will initially include APT, TIA, CBETH, ATOM, NEAR, OSMO, DOT, SEI, and SOL in its portfolio.
Let’s see below all the details.
Summary
Grayscale’s strategy to maximize earnings through crypto staking
As anticipated, Grayscale, the investment company behind the largest Bitcoin ETF, recently launched a new cryptocurrency-focused fund to generate income.
The Grayscale Dynamic Income Fund (GDIF) will initially hold assets of nine blockchains.
Among these we see: Aptos (APT), Celestia (TIA), Coinbase Staked Ethereum (CBETH), Cosmos (ATOM), Near (NEAR), Osmosis (OSMO), Polkadot (DOT), SEI Network (SEI) and Solana (SOL).
The main goal will be to distribute prizes in US dollars on a quarterly basis.
Representing the first actively managed fund initiative, the GDIF represents a significant expansion of Grayscale’s product range.
Specifically allowing investors to participate in multi-asset staking through a single convenient and familiar investment vehicle.
Michael Sonnenshein, CEO of Grayscale, emphasized the importance of this initiative in a statement:
“Staking plays a crucial role in the operation of some blockchains, while the Bitcoin network is based on proof-of-work, proof-of-stake networks, like Ethereum, allow token owners to stake their assets for the operation of the network, generating income for the owners.”
This move by Grayscale reflects the opportunity to introduce new crypto products into the market, especially considering the recent record price of Bitcoin, which has surpassed $69,000.
Speaking of the favorable moment of cryptocurrencies, Zach Pandl, head of research at Grayscale, stated that valuations of Ethereum (ETH) and most other tokens remain below the highs of the previous cryptocurrency cycle.
He also pointed out that, despite the possibility of further increases in token valuations, macroeconomic factors could pose a headwind.
Record outflows: 33% reduction in Grayscale’s BTC holdings
In recent months, US exchange-traded funds (ETFs) linked to Bitcoin have reached new all-time highs, achieving unprecedented daily flows and trading volumes.
However, behind this frenzy lies some less positive news for Grayscale and its GBTC ETF.
On March 4th, ETFs reached a significant trading volume of 5.5 billion dollars, with the iShares Bitcoin Trust (IBIT) from Blackrock making a significant contribution by surpassing the 11 billion dollars in AUM.
Nevertheless, Grayscale’s GBTC has seen significant outflows, a trend that has persisted since January 11, 2024, the date of its conversion to an ETF.
Specifically, while spot BTC ETFs have recorded a positive net flow of 562 million dollars, GBTC has marked an outflow of 368 million dollars.
Since January, GBTC has accumulated record outflows of $9.266 billion, corresponding to a 33% reduction in BTC holdings.
The reasons for this trend include the high fees imposed by GBTC, which differ significantly from other ETFs, remaining fixed at 1.5%.
Furthermore, cheaper alternatives and the massive sale of stakes by bankrupt cryptocurrency companies, such as FTX and Genesis, have contributed to the reduction of BTC stakes in GBTC.
In this context of significant changes, the investor community is now trying to understand the long-term implications of this decrease in BTC holdings by Grayscale.
