Grayscale’s CEO, Michael Sonnenshein, has expressed doubt about the sustainability of recently launched spot Bitcoin ETFs, asserting that the competition among these issuers to reduce fees won’t prevent many from exiting the crypto market.
During an interview with CNBC on Thursday, January 18, 2024, Sonnenshein projected that, ultimately, only two or three ETFs would remain in the financial market.
Some days leading up to the US Securities and Exchange Commission’s approval of 10 spot Bitcoin ETFs on January 10, many of the potential ETF issuers slashed their trading fees to attract investors and compete aggressively in the market. These reductions ranged from approximately 0.2% to 0.4% for most ETFs, with Bitwise offering the cheapest rates.
Grayscale opted not to participate in this fee-slashing rally, maintaining its existing 1.5% fee for its ETF, the Grayscale Bitcoin Trust (GBTC). Consequently, GBTC currently boasts the highest trading fees in the market.
Sonnenshein explained the reasons behind GBTC’s relatively high trading fees, emphasizing Grayscale’s position as the largest bitcoin issuer with over a decade of successful operation and a diverse investor base.
The CEO highlighted that investors consider crucial factors such as track record and liquidity when choosing an ETF product to determine the issuer’s credibility. He asserted that investors are likely to favour investment firms with a proven track record, which many newly launched ETFs lack.
“Grayscale is a crypto specialist. And it has really paved the way for a lot of these products coming through,” Sonnenshein reportedly stated.
Despite having approximately $23 billion in assets under management (AUM), GBTC is notably underperforming compared to other recently approved spot Bitcoin ETFs. It has experienced five consecutive days of negative net flows despite its high transaction volumes.
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