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Grayscale Filed for Blockchain Stocks ETF, Plans on Market Expansion

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Grayscale is keeping up with the rapidly developing market by giving its clients exposure to blockchain-related companies.

Grayscale fund management firm has planned the expansion of the market by adding a new product that will track the Bloomberg index via Eric Balchunas. The new fund will be called Futures of Finance and will act as a tool of exposure for clients who are willing to invest in blockchain-related stocks.

The index designed by Bloomberg consists of securities related to the blockchain or digital assets industry. Companies in the index are involved in blockchain development, operations with digital assets and mining.

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The fund will use passive management that will only track the index. Such a strategy allows exposure to the fund without paying additional fees and roll costs.

It is not the company’s first step in the expansion of its business. Previously, Grayscale filled an SEC application to convert its currently existing Bitcoin fund (GBTC) into an exchange-traded fund. The possible hearing will take place on Dec. 24.

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Grayscale has lost a major portion of its potential clients due to the approval of the first Bitcoin ETF in the U.S. Currently, Grayscale’s fund is trading with a negative premium of 20%, which means that the fund is underperforming against its underlying asset: Bitcoin.

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Crypto Giant Grayscale Exploring Two Ethereum Rivals After Launching Support for Solana

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The world’s largest digital asset manager just announced the launch of a single-asset investment product exposing its holders to Solana (SOL) – and support for more Ethereum competitors may be imminent.

In a press release, Grayscale announces the new Solana Trust, which will join its other 13 single-asset crypto investment products.

“The Trust is solely and passively invested in Solana (SOL), the native token of the Solana network, a smart contract platform first conceived in a 2017 whitepaper. Like the Ethereum network, the Solana network is one of a number of projects intended to expand blockchain use beyond just a peer-to-peer money system.”

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In addition to Solana, the crypto management firm says it’s now taking a close look at whether it will add support for the smart contract platforms Terra (LUNA) and Avalanche (AVAX).

Both assets have had breakout years in terms of price and adoption, with LUNA rising from $0.66 at the start of 2021 to its current price of 58.66.

In the same time frame, AVAX has shot from $3.37 on January 1st to its current price of $120.70.

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Grayscale CEO Michael Sonnenshein says that investors are increasingly looking to expand their portfolios beyond the Bitcoin (BTC) and Ethereum (ETH) staples.

“For the last eight years, Grayscale has been at the forefront of offering investors efficient exposure to the ever-evolving digital currency ecosystem,

We have had a front-row seat to the mainstream acceptance and adoption of crypto and increasingly find that investors are diversifying their exposure beyond digital assets like Bitcoin and Ethereum.”

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According to the press release, the Grayscale Solana Trust is the sixteenth crypto investment product from Grayscale. Other single-asset investment products include Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Decentraland (MANA) and Filecoin (FIL).

Grayscale also offers a Digital Large Cap Fund, an investment product exposing investors to the upper 70% of digital assets by market cap.

Earlier this month, Grayscale recorded nearly $60 billion in assets under management.

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Grayscale Predicts Metaverse Could Become a Trillion Dollar Industry

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Metaverse has overtaken the NFT hype this bull season as more mainstream projects aims to enter the virtual reality world in near future. A Grayscale research report has estimated that the number of Metaverse users have risen by 10X in one and a half year.

The report also predicted that if the Metaverse universe continues to flourish at the current rate, it could very well become a trillion-dollar industry by next year. The following chart shows the growing number of Metaverse wallets that has peaked to new highs in the last quarter of 2021.

Metaverse

The report takes note of how Metaverse has already become a hit in the entertainment and real estate industry despite it being in the early stage. Metaverse would be the key to Web 3.0 quite similar to what Facebook did for Web 2.0. The report read,

The Web 2.0 mobile internet changed how, where, when, and why we used the internet. In turn, this changed the products, services, and companies we used, which changed our business models, culture, and politics – the Web 3.0 Metaverse has the potential to do the same.

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The Web 3.0 based economy is already a trillion-dollar industry in making, which is certainly one of the key reasons for organizations like Facebook to do a complete branding overhaul.

The following graph shows the difference between today’s online games and what metaverse with an open world system could bring to the table.

Metaverse

Metaverse Tokens on The Rise

At a time when most of the crypto market is experiencing a bearish trap right after a mammoth October, Several Metaverse tokens have surged to new all-time highs and look immune to the ongoing bearish trends. Decentraland (MANA) is one of the most popular metaverse tokens which have got attraction from many celebrities and also saw the recent sale of a virtual property worth $2.45 million which is higher than some of the luxury apartments in New York.

The native token MANA has surged nearly 9X over the past month even when most of the other crypto tokens are down by 20%.

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Metaverse
Source: TradingView

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Grayscale Funds Still Trade with Negative Premium, Here’s What It Means

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Grayscale is continuously trading with a discount compared to its underlying asset

Grayscale’s Bitcoin and Ethereum funds are continuously moving in the negative, which might mean numerous things for potential investors that would like to receive exposure to the cryptocurrency market.

Grayscale’s performance

Premium and discount rates usually reflect the performance of the fund that manages its clients’ assets. With the approval of futures-backed Bitcoin ETFs, Grayscale lost some of its clients and potential investors, the most likely the reason for the conversion application filled previously.

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The premium rate in fact reflects the net asset value compared to the share price. When the price of the ETF trades below its NAV, the fund is trading at discord and vice versa.

How market usually reacts

If a trader has to choose between the fund and the underlying asset, he could use the premium or discount rate to determine which offering on the market will be more beneficial.

With a high premium, a trader has to overpay for the same position that he or she could have opened on the spot market.

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The average premium rate for the Grayscale Bitcoin fund has been staying at around 28% with the maximum reaching 132%. But after the increased volatility on the market, Grayscale’s tracking had deteriorated, especially after Bitcoin lost 40% of its value in May.

The tracking issue remains one of the main issues for both private and exchange-traded funds. With the approval of the futures-based Bitcoin ETF, institutional traders indeed receive exposure to the cryptocurrency market but, unfortunately, have to pay high roll costs, go through contango bleed and lose up to 20% of unrealized profit.

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