Key Points
- Grayscale Investments has completed reverse share splits for its Bitcoin and Ethereum ETFs.
- The firm’s Bitcoin ETF options will begin trading from 21st November.
Grayscale Investments, a prominent digital asset manager, has carried out reverse share splits for its Bitcoin Mini Trust ETF and Ethereum Mini Trust ETF.
These changes were implemented on the 20th of November, following the execution of the reverse share splits the previous night.
What is a Reverse Share Split?
A reverse share split is a process where multiple shares are combined into one, which reduces the total number of shares but increases the share price.
David LaValle, Grayscale’s Global Head of ETFs, expressed his belief that this decision was beneficial for both their clients and the investment community in a recent blog post.
Implications of the Reverse Share Split
Grayscale highlighted the benefits of reverse share splits, including their ability to streamline trading and make it more cost-effective for market participants.
Following this move, Grayscale’s Ethereum Mini Trust ETF underwent a 1:10 reverse share split, which increased the price per share to 10 times its pre-split net asset value (NAV), while reducing the number of shares proportionately.
In a similar manner, Grayscale’s Bitcoin Mini Trust ETF executed a 1:5 reverse split, raising the price per share to five times its pre-split NAV, with a corresponding decrease in shares outstanding.
However, Grayscale noted that shareholders might end up holding fractional shares after the split.
These fractional shares, based on the policies of their Depository Trust Company (DTC) participant, can either be tracked internally or aggregated and sold, with shareholders receiving cash proceeds.
It’s important to note that fractional shares are not eligible for trading on the NYSE Arca.
Performance of Grayscale’s Bitcoin and Ethereum ETFs
Post-split, the firm’s ETFs for Bitcoin and Ethereum showed mixed performance, according to Yahoo Finance.
The Bitcoin Mini Trust ETF closed at $41.84, marking a 1.80% increase during regular trading hours.
Conversely, the Ethereum Mini Trust ended at $28.93, representing a depreciation of 0.92%. However, it saw a pre-market rise to $29.58, gaining 2.25%.
Launch of BTC ETF Options
This reverse share split comes just before a significant development for the firm.
Grayscale is poised to launch the Bitcoin ETF options for its Grayscale Bitcoin Trust (GBTC) the Mini Trust on the 21st of November, marking a significant expansion in the U.S. market.
This development follows the debut of BlackRock’s IBIT options, which saw nearly $1.9 billion in trading volume on its opening day.
