Curriculum·S212 TradFi Access Rails: ETFs, ETPs, and Treasuries·about 32 min
Spot ETFs and ETPs
By the end of this lesson you can
- →Explain how creation and redemption keep an ETF's price tethered to its net asset value
- →Identify the wrapper types that lack that mechanism, and what happens to their price
- →Compute the cost of entering at a premium and exiting at a discount
- →Distinguish an ETF, an ETP, an ETN and a trust by what you actually own
Sophomore · enrolled learners
This lesson opens with The Grayscale Bitcoin Trust discount, 2021 to 2024.
- What happened
- GBTC held bitcoin and issued shares, but its sponsor was not operating a redemption program, so authorized participants could not buy shares cheaply and redeem them for the underlying. Nothing could force the share price toward the value of the bitcoin held. By the trust's own annual report, between May 2015 and December 2022 the shares were quoted at a maximum premium of 142 percent and an average premium of 37 percent, and at a discount on 468 days. The Block reported the first discount in late February 2021, and the discount stayed: The Block reported a then-record 45.2 percent on 21 November 2022, the annual report gives a maximum discount of 49 percent and a discount of 45 percent on 30 December 2022, and CoinDesk reported nearly 50 percent in December 2022. The trust's audited financial statements reported its bitcoin holdings throughout. The discount closed to zero by 11 January 2024, the day after the SEC cleared conversion to a spot ETF, because conversion gave authorized participants the ability to create and redeem shares at net asset value.
- The decision point
- For nearly three years the holders owned a claim on bitcoin that the market priced below the bitcoin, and at the widest at roughly half of it. No custody failed, no coins were lost, and no counterparty defaulted. The entire gap was the absence of one structural feature, and the gap closed within days of that feature being granted, which is as clean a demonstration as this asset class provides that the wrapper is a separate thing from what the wrapper holds.
What you will be able to answer
- →What keeps an ETF's price near its net asset value?
- →What happens to a wrapper without that mechanism?
- →What does an ETN give you?
- →What does entering at a premium and exiting at a discount cost?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://www.sec.gov/Archives/edgar/data/1588489/000119312523054302/d453116d10k.htm
- https://www.coindesk.com/markets/2024/01/11/grayscales-gbtc-discount-closes-to-zero-for-first-time-since-february-2021
- https://www.theblock.co/post/188811/grayscales-gbtc-discount-to-nav-hits-record-low
- https://www.theblock.co/news/ecosystems/2021-04-23-grayscale-bitcoin-trust-gbtc-discount-19-102694
- https://www.sec.gov/Archives/edgar/data/1053092/000095010318001572/dp86358_ex9901.htm
- https://www.forbes.com/sites/digital-assets/2026/04/17/choke-point-bitcoins-77b-coinbase-etf-warning-shocks-markets/
- https://www.sec.gov/Archives/edgar/data/1980994/000143774925011313/bit20250404_8k.htm
Confidence high·Volatility medium·Reviewed 2026-08-06·Owner unassigned
Contested
This lesson names GBTC because the incident is documented and structural. It is not a judgment about Grayscale, which disclosed the absence of redemption throughout and pursued conversion for years. The failure being taught is a property of the wrapper type, and it would have applied identically to any closed-end structure.
Terminology in this area is used loosely and inconsistently across jurisdictions. The definitions here describe what the holder owns, which is the distinction that determines outcomes, rather than any regulatory classification.
The 2.0 percent fee, the premium and discount ranges, the 468 discount days and the 45 percent discount of 30 December 2022 used as the exit in the worked example are from the trust's 10-K for 2022, which gives a maximum discount of 49 percent. The 45.2 percent record of 21 November 2022 and the first discount in late February 2021 are The Block's, and the nearly 50 percent in December 2022 is CoinDesk's; the sources measure at different times and from different price feeds, so they do not agree to the decimal. The 20 percent entry premium in the worked example is illustrative, chosen inside the filing's recorded range, and is not a dated quote.
The 84 percent and $77B custody figures are Marc Baumann's, founder of the research firm fiftyonexyz, posted on X on 14 April 2026 and quoted by Forbes, which says he compiled the category's assets from issuer prospectus filings. They are not a regulator's figure.