See More

Grayscale CEO Anticipates Other Spot Bitcoin ETFs Might Not Survive

2 mins
Updated by Ryan Boltman
Join our Trading Community on Telegram

In Brief

  • Grayscale CEO, Michael Sonnenshein, predicts a grim future for several spot Bitcoin ETFs due to their lack of sustainability.
  • Grayscale's Bitcoin Trust ETF, with over $25 billion in assets, justifies its higher fees (1.5%) with its commitment and experience in crypto.
  • Despite its success, Grayscale's BTC reserves have declined by over 37,740 since spot Bitcoin ETFs started trading, indicating a loss of appeal.
  • promo

In a bold assertion, Michael Sonnenshein, CEO of Grayscale Investments, predicts a bleak future for several other spot Bitcoin exchange-traded funds (ETFs).

During an interview with CNBC, Sonnenshein expressed his skepticism about the long-term viability of competitors’ spot Bitcoin ETFs.

How Grayscale CEO Justified High Fees of GBTC Spot Bitcoin ETF

Grayscale’s Bitcoin Trust ETF (GBTC) boasts over $25 billion in assets under management, making it the world’s largest Bitcoin fund. This prominence, Sonnenshein argues, is attributed to its decade-long track record of successful operation and a diverse investor base.

Read more: What Is a Bitcoin ETF?

Unlike its rivals, the Grayscale Bitcoin Trust ETF imposes a 1.5% fee, significantly higher than most approved ETFs that charge between 0.2% and 0.4%. According to Sonnenshein, the funds’ commitment and experience in the crypto field justifies the fees.

“Investors are weighing heavily things like liquidity and track record and who the actual issuer is behind the product. Grayscale is a crypto specialist. And it has really paved the way for a lot of these products coming through,” said Sonnenshein

The crux of Sonnenshein’s argument lies in the long-term sustainability of these competing ETFs. He postulates that only two to three of the spot Bitcoin ETFs might achieve a critical mass of assets under management. The others, he warns, risk being pulled from the market due to their inability to garner substantial interest or investment.

“I don’t ultimately think that the marketplace will have ultimately these 11 spot products we find ourselves having,” Sonnenshein said.

Despite Sonneshein’s argument, the GBTC ETF is losing appeal in the market due to its high fees. The screenshot below shows that Grayscale’s BTC reserves have declined by over 37,740 since the spot Bitcoin ETFs started trading.

Grayscale's Bitcoin Reserves
Grayscale’s Bitcoin Reserves. Source: CryptoQuant

The investors may have been possibly redeeming their GBTC holdings to switch to Grayscale’s competing ETFs. Moreover, the discounts to net asset value have declined significantly, from 47% in February 2023 to around 1% in 2024.

Read more: 7 Must-Have Cryptocurrencies for Your Portfolio Before the Next Bull Run

Hence, some investors who purchased GBTC shares at a discount might be booking the profits.

Meanwhile, BlackRock’s iShares Bitcoin Trust has achieved the milestone of $1 billion in assets under management (AUM).

Top crypto projects in the US | July 2024
Harambe AI Harambe AI Explore
Uphold Uphold Explore
Exodus Exodus Explore
Coinbase Coinbase Explore
Chain GPT Chain GPT Explore
Top crypto projects in the US | July 2024
Harambe AI Harambe AI Explore
Uphold Uphold Explore
Exodus Exodus Explore
Coinbase Coinbase Explore
Chain GPT Chain GPT Explore
Top crypto projects in the US | July 2024

Trusted

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

Frame-2264-1.png
Harsh Notariya
Harsh Notariya is a journalist at BeInCrypto, who writes about various topics, including decentralized physical infrastructure networks (DePIN), tokenization, crypto airdrops, decentralized finance (DeFi), meme coins, and altcoins. Before joining BeInCrypto, he was a community consultant at Totality Corp, specializing in the metaverse and non-fungible tokens (NFTs). Additionally, Harsh was a blockchain content writer and researcher at Financial Funda, where he created educational reports on...
READ FULL BIO
Sponsored
Sponsored