An old fork getting a new lease on life. Bitcoin Cash jumped more than 30% in a single session this week, driven by the futures announced by the CME for October 19. A second engine is running behind the scenes: Grayscale wants to convert its Bitcoin Cash Trust into an ETF listed on NYSE Arca, under the ticker BCHG.

Holders of Grayscale's bitcoin and ether trusts know all too well what that nuance can cost.

Key takeaways from this article:

  • Grayscale sought to convert its Bitcoin Cash Trust into an ETF listed on NYSE Arca, triggering a market shock for Bitcoin Cash.
  • Grayscale’s previous trusts, GBTC and ETHE, suffered heavy discounts, illustrating the risks associated with these structures compared to ETFs.

Trust vs. ETF: the difference that cost GBTC holders dearly

A Grayscale trust operates as a closed-end fund. It issues a fixed number of shares backed by crypto, which are then traded between investors on the over-the-counter market. There is no mechanism to redeem them for the underlying crypto assets. As a result, the share price can deviate significantly and persistently from the value of the assets held, known as the net asset value (NAV).

An ETF works the opposite way. Authorized participants create or redeem shares based on demand, which constantly keeps the market price close to the value of the underlying assets.

Grayscale Bitcoin Trust (GBTC) holders learned this the hard way. Long traded at a premium, the fund flipped to a discount in 2021. In December 2022, in the depths of the bear market, shares were trading at nearly 50% below the value of the bitcoin they represented. Grayscale's Ethereum Trust (ETHE) fared even worse, hitting a record discount of approximately 59% at the end of that same month.

GBTC, ETHE: the legal battle that paved the way for ETFs

Grayscale eventually took the matter to court. Following the SEC's rejection in June 2022, the company appealed to the U.S. Court of Appeals for the D.C. Circuit. On August 29, 2023, the judges ruled unanimously in their favor and vacated the regulator's decision, as announced by Grayscale. Spot bitcoin ETFs, including GBTC, were launched in January 2024, followed by ether ETFs in July of that same year.

The conversion had a downside. Long-suffering holders were finally able to exit at fair value, and they didn't hesitate. Faced with much cheaper competitors, GBTC saw its assets under management dwindle for months, while BlackRock and Fidelity picked up the slack.

Bitcoin Cash ETF: a premium that once hit 1,852%

The Bitcoin Cash Trust has experienced even more extreme deviations. According to the registration statement filed with the SEC, its shares traded between August 2020 and June 2026 with a maximum premium of 1,852% and a maximum discount of 59%. On September 9, 2026, the share price was $1.96, or 5% below its NAV, compared to a 9% discount at the end of June.

The conversion application was amended on September 11, 2026, to rename the fund the Grayscale Bitcoin Cash Trust ETF. A spot ETF is required to purchase Bitcoin Cash for every dollar raised. CME futures, on the other hand, are cash-settled without ever touching a single BCH. This is why the market reacted so strongly to the combination of the two announcements.

Grayscale is already familiar with the process. The manager converted its Zcash trust into an ETF listed on NYSE Arca in August, under the ticker ZCSH. Bitcoin Cash was trading around $336 on September 24, following a peak above $350 earlier in the week, up from $270 before the CME announcement.

Magali

Falling down the rabbit hole in 2017, I went from an avid reader to Editor-in-Chief of the Journal du Coin. I enjoy getting involved behind the scenes of projects to promote my vision of a decentralized future. A lover of fine literature, I coordinate our teams to transform technical complexity into human, precise, and jargon-free information. Between entrepreneurship and writing, my mission is clear: to popularize tomorrow, but to do it today.

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