Grayscale Investments’ new mini bitcoin ETF is slated to feature an annual fee that’s a tenth of its long-established predecessor, the Grayscale Bitcoin Trust (GBTC), but that doesn’t mean it’s likely to eventually capture all of GBTC’s assets. That’s because it’s probably going to appeal more to buy-and-hold investors rather than the more active traders of GBTC.

The new entity, Grayscale Bitcoin Mini Trust (BTC), would impose a 0.15% annual fee, according to a recent SEC filing citing pro forma information, meaning the figure is subject to regulatory approvals and could change. If its 15 basis point fee stands, Grayscale’s cut would be the lowest among all spot bitcoin ETF issuers, including Fidelity and BlackRock, and below that of the Franklin Bitcoin ETF (EZBC), which maintains a 19 basis point fee. That compares to the 1.5% annual fee of GBTC.

Mini ETFs, as implied, are by design smaller than existing offerings. BTC’s assets, post-launch, would likely pale in comparison to GBTC, which had $19.6 billion through Monday’s close. Fewer assets equates to less liquidity and wider spreads. But those drawbacks are well worth it for investors with a long time horizon, considering the savings on fees. By contrast, traders are willing to pay higher annual fees in exchange for better prices and execution.

Read more: There Are Now 11 Spot Bitcoin ETFs. Here’s the One That’s Best for You

Brian Estes, chief investment officer of crypto investment firm Off The Chain Capital, said that the “purpose of BTC is to provide a competitive landscape against the lower fee alternatives,” adding that it, not GBTC, is “the one that’s going to compete on fees.”

A person familiar with the matter who spoke on condition of anonymity pointed to the popularity of mini ETF versions of popular Nasdaq-tracking exchange-traded funds. 

“It’s different products for different investor types,” the person said of Grayscale’s BTC and GBTC offerings. “Traders like a product with a higher track record and liquidity and tight spreads. Buy and hold investors tend to like a mini product.”

In a January episode of the Unchained podcast, James Seyffart, a Bloomberg ETF analyst, predicted Grayscale would launch another bitcoin ETF in addition to GBTC. 

“My theory here is that Grayscale is going to launch another ETF,” Seyffart said at the time. “They have the ticker, so GBTC is one. They also own the ticker rights for BTC. My theory is they’re going to launch a much cheaper sibling that will compete with all of these low fee products.” 

Capital Gains Savings

The preliminary plan is for Grayscale to move 10% of GBTC’s underlying bitcoins — about 63,204 — to seed BTC. That means GBTC investors would automatically have 10% of their GBTC holdings transferred to BTC.

The prospect of paying significant capital gains taxes has prevented some long-term GBTC investors from redeeming their shares, but Grayscale said that current GBTC shareholders could transfer their assets into the new fund without creating a taxable event. 

Rob Frasca, managing partner of crypto investment firm COSIMO Venture Partners, said that “any time you’re sitting on a lot of capital gains, the last thing in the world you want to do is move it and get hit with the taxes, right? So, if they’ve got a product that moves from their trust model to their ETF model … it’s probably a great way for them to hold onto market share.”

Thanks to their new BTC holdings, current GBTC owners would pay a bit less under a blended fee structure between the two vehicles. 

Bitcoin traded around $66,700 by the stock market close in New York on Monday, up about 2.7% on the day and 8.9% over the past five days, a period marked by the halving.