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Patient Capital Management Dives into Crypto with $1.4 Billion Investment: 15% Allocation to Bitcoin ETFs?

Last Updated March 13, 2024 1:09 PM
Teuta Franjkovic
Last Updated March 13, 2024 1:09 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Patient Capital is ditching the Grayscale fund for a wider range of Bitcoin exchange-traded products (ETPs).
  • Its prospectus update highlights crypto regulatory risk instead of just ‘Bitcoin risk,’ acknowledging broader industry challenges.
  • Grayscale’s new “mini” ETF filing suggests it’s adapting to compete with lower fees and potentially offer tax advantages.

Patient Capital Management updated its Patient Opportunity Trust prospectus, filed  with the United States Securities and Exchange Commission (SEC) on March 11, to replace the Grayscale Bitcoin Trust.

This revision included changing the risk factors to highlight “cryptocurrency regulatory risk” instead of “Bitcoin risk.”

Patient Capital Expands Bitcoin Bets Beyond Grayscale Fund

By revising its prospectus, Patient Capital Management now allows the Patient Opportunity Trust to invest in a broader range of exchange-traded products (ETPs), moving beyond exclusively investing in the Grayscale fund.

According to the filing :

“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 invest primarily 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.”

Patient Capital Dives into Bitcoin with Potential $200M Allocation

Patient Capital Management has announced its intention to allocate up to 15% of its capital into Bitcoin Exchange-Traded Products (ETPs), as per their latest filing. With $1.4 billion in assets under management as of December 31, 2023, this allocation could surpass $200 million. This strategy suggests  the firm may adopt a long-term holding approach for its Bitcoin investments, a technique often referred to as “hodling” in the cryptocurrency community.

The website says :

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

Patient Capital Management’s filing said  the fund would face the risk of Bitcoin price fluctuations. It also noted the potential for future regulatory changes. The filing also pointed out that certain countries, including the US, might impose restrictions or completely ban the acquisition, use, or sale of Bitcoin in the future.

Grayscale Unveils “Mini” ETF Variant to Stay Competitive

Grayscale Investments is also taking steps to launch a new variant of its exchange-traded fund (ETF). On March 11, Grayscale filed  an S-1 form with the United States Securities and Exchange Commission (SEC) to register a new “mini” version of its ETF. However, specific details of this filing were not available at the time of writing (March 13 2024).

Bloomberg Intelligence ETF analyst James Seyffart said  Grayscale’s latest efforts seem aimed at offering investors tax advantages. This would not only enhance the appeal of Grayscale’s offerings but also position it strategically against competitors who might offer lower fees or additional benefits​​.

Speaking of competition, Grayscale faces notable challenges due to its comparatively high management fee of 1.5% annually. This is a significant consideration for investors, especially when rivals like VanEck are making bold move s to attract investment.

Indeed, VanEck announced on March 11 that it would eliminate sponsor fees on the first $1.5 billion of funds in its Bitcoin Trust ETF until March 31, 2025​.

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