Patient Capital Management Shifts from Grayscale Bitcoin Trust to BTC ETP

With $1.4 billion in assets under management, Patient Capital Management has updated its Opportunity Trust Fund prospectus, swapping out the Grayscale Bitcoin Trust for a Bitcoin Exchange-Traded Product (ETP) in a filing with the United States Securities and Exchange Commission on March 11. Alongside this change, it has also adjusted its risk factors to address “cryptocurrency regulatory risk” instead of solely “bitcoin risk.”

The filing states:

“Effective immediately, the Fund may seek exposure to bitcoin by investing up to 15% of its net assets in exchange-traded products that are registered under the Securities Act of 1933 and primarily invest in bitcoin (‘Bitcoin ETPs’). Therefore, all references to Grayscale Bitcoin Trust throughout the Prospectus and Statement of Additional Information are replaced with references to Bitcoin ETPs.”

This strategic shift broadens the fund’s investment scope to encompass all available exchange-traded products (ETPs), rather than being limited to the Grayscale fund.

According to the new filing, Patient Capital Management aims to allocate up to 15% of its capital to BTC ETPs. With $1.4 billion in assets under management as of December 31, 2023, the firm’s BTC investment could exceed $200 million. The fund appears to be adopting a long-term holding strategy for its BTC investments, as indicated on its website:

“In this market, we believe volatility is the price you pay for long-term returns.”

Patient Capital Management acknowledges in its filing that the fund will bear the risk associated with BTC price fluctuations and acknowledges potential future regulatory restrictions on bitcoin acquisition, use, or sale, especially in the United States.

On the same day, Grayscale filed an S-1 form with the SEC to register a new “mini” version of its exchange-traded fund (ETF), with Bloomberg analyst James Seyffart suggesting that the new fund seeks to offer tax advantages.

As competition for investors intensifies, Grayscale faces increasing pressure due to its relatively high management fee of 1.5% annually. In response, VanEck announced on March 11 that it would waive sponsor fees on the initial $1.5 billion of funds in its Bitcoin Trust ETF until March 31, 2025.