Grayscale Plans to Turn Digital Large Cap Fund into an ETF

• Grayscale aims to relocate its electronic Large Cap Fund to the NYSE to enhance trading options.
• A successful ETF conversion could impact BTC and Ethereum sales dramatically.
• The firm is expanding its offerings by adding new altcoins and investment portfolios.

Grayscale Money Input has filed to convert its Digital Large Cap Fund GDLC:OTCQX into an exchange-traded fund . This fund tracks five leading cryptocurrencies: Bitcoin , Ethereum , Solana , XRP , and Avalanche . If approved, GDLC will switch from over-the-counter trading to the New York Stock Exchange . The company’s spokesperson stated that this filing does not ensure market recognition.

Current Market Landscape

GDLC shares currently trade at a large discount of over 30% compared to their net asset value . This discount is similar to the challenges Grayscale’s Bitcoin Trust faced before its conversion into an ETF. GBTC had a discount exceeding 40%, which created uncertainty for investors.

The conversion of GBTC into an ETF helped narrow its discount. Many investors sold their shares after this conversion, and this led to downward pressure on Bitcoin’s price. If GDLC converts into an ETF, a similar trend may happen. Consequently, new selling pressure on Bitcoin and Ethereum could arise since these two assets make up 90% of GDLC’s holdings.

Implications for Grayscale and Investors

If GDLC converts successfully, it will be Grayscale’s fifth ETF launch this year. Previous conversions of GBTC and the Grayscale Ethereum Trust (ETHE) have set important precedents. Both funds have seen substantial outflows, with more than $23 billion withdrawn, according to Farside Investors. This trend highlights the need to maintain investor confidence.

Moreover, the approval of GBTC and ETHE has led to many new applications for ETFs focusing on smaller cryptocurrencies. Various issuers are seeking approval for funds holding assets like Ripple’s XRP, Solana’s SOL, and Litecoin’s LTC. ETFs usually provide greater liquidity than traditional closed-ended funds. This structure allows for creating or redeeming shares based on market demand.

Grayscale’s Expanding Portfolio

Besides its ETF filings, Grayscale continues to expand its investment offerings. The firm has added new altcoins like Dogecoin, Worldcoin (WLD), and Jupiter to its considerations. Additionally, Grayscale launched several new funds, including an Aave investment fund in October and an XRP Trust in September.

As the regulatory landscape changes, other firms like Bitwise and Canary Capital are pursuing similar products. They have filed for permission to launch a spot XRP ETF, which is currently awaiting approval.