The Grayscale Bitcoin Trust is now the largest public holder of bitcoin, but competition is heating up

• The Grayscale Bitcoin Trust is now the largest public holder of bitcoin, according to Bank of America.
• The trust likely owns 700,000 bitcoin, or about 3.5% of total supply, BofA said in a note on Wednesday.
• But competition is heating up as Osprey launches a rival bitcoin trust and several ETFs apply for approval.
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The largest public holder of bitcoin is Grayscale, which operates the Grayscale Bitcoin Trust, Bank of America said in a note on Wednesday.

The trust, which trades like a stock on the over-the-counter market, likely owns 700,000 bitcoin, which represents about 3.5% of total supply and is worth more than $31 billion, BofA said. The trust has $36.1 billion in assets under management as of Tuesday and has often traded at a premium to its underlying bitcoin holdings.

"The trust has been steadily buying bitcoin over 2020, especially in 4Q20 and has become one of the 5 largest holders of the cryptocurrency," BofA said.

The Grayscale Bitcoin Trust launched in 2013 and is the go-to option for investors who want to add bitcoin exposure to their portfolio without directly buying the cryptocurrency. For years, Grayscale's trust has been the only option for investors looking for easy access to bitcoin, as the SEC has blocked the launch of bitcoin ETFs over the years.

Grayscale has been able to take advantage of being the only option for investors by charging a hefty 2% annual fee, but competition is beginning to heat up.

Last month, the Osprey Bitcoin Trust launched with an annual fee of 0.49%, significantly undercutting Grayscale's fees. The Osprey Trust has already attracted $103 million in assets under management as of Tuesday.

February also saw the first launch of a bitcoin ETF in North America, as Canada approved the Purpose Bitcoin ETF, which trades on the Toronto Stock Exchange. Issuers in the US that have filed applications with the SEC for approval of a bitcoin ETF include VanEck, WisdomTree,

Even Grayscale is looking to launch its own bitcoin ETF, as Grayscale CEO Michael Sonnenshein told Insider earlier this month. Recent job listings from the firm have zeroed in on ETF specialists, signalling the firm's expected move into the space if the SEC grants approval.

Whether the Grayscale Bitcoin Trust will be able to hold onto its title as the top public holder of bitcoin as the cheaper Osprey Bitcoin Trust gains its footing and if the SEC approves bitcoin ETFs remains to be seen.