Michael Sonnenshein, CEO of Grayscale Investments, noted a potential stabilization in outflows from the Grayscale Bitcoin Trust following a period of sustained investor sell-offs. This stabilization coincided with increased competition in the bitcoin exchange-traded fund (ETF) market, with nine other issuers entering the fray in January, spurred by the U.S. Securities and Exchange Commission’s (SEC) approval after years of contention with the crypto industry.
Despite BitMEX Research data indicating outflows exceeding $15 billion from the Grayscale Bitcoin Trust (GBTC) in the past three months, the rise in bitcoin’s value has somewhat offset Grayscale’s dip in assets under management, which currently stands at $23.13 billion.
Sonnenshein highlighted various factors contributing to recent outflows, including selling linked to bankruptcy settlements involving companies like FTX and other defunct crypto entities. Additionally, some investors may have opted to liquidate their Grayscale ETF holdings to reinvest elsewhere.
While daily outflows have decreased from March’s peak levels, they remain negative, with Monday’s outflows reaching $303 million, per BitMEX Research.
Looking ahead, Sonnenshein stressed the importance of expanding the investor base and fostering product innovation. Grayscale is exploring strategies to compete with newer offerings from firms like BlackRock and Fidelity. For example, Grayscale intends to seek SEC approval for a Bitcoin Mini Trust with lower fees, though specific fee details are yet to be disclosed.
Presently, Grayscale imposes a 1.5% fee on its ETF, higher than the approximately 0.25% average fee charged by its competitors. Sonnenshein anticipates fee reductions for GBTC as the market matures.
Bitcoin has seen substantial growth since ETF introductions, appreciating by over 60% this year. Grayscale is also seeking SEC approval for a spot ether ETF, with a decision expected by late May.
Grayscale’s legal confrontation with the SEC, resulting in a court order for the SEC to reassess its Bitcoin ETF decision, has facilitated recent approvals. Sonnenshein remains optimistic that the SEC will greenlight additional products, aligning with cryptocurrency investment’s evolving landscape.
