Not All Approved Spot Bitcoin ETFs Will Survive : Says Grayscale CEO

In a recent interview at the World Economic Forum in Davos, grayscale Investment grayscale Investment - Investment platform   Investments CEO Michael Sonnenshein shared his reservations about the long-term viability of most recently approved Bitcoin ETFs. 

Probable Extinction

Despite the widespread practice of lower fees among competitors, Sonnenshein defended Grayscale’s Bitcoin Trust ETF, which charges a relatively high 1.5% fee. He attributed this premium fee to the fund’s status as the world’s largest Bitcoin fund, boasting over $25 billion in assets under management, a decade-long successful track record, and a diversified investor base.

Sonnenshein expressed scepticism about the sustainability of ETFs offering lower fees, suggesting that these products lack a proven track record and may raise questions about the issuers’ commitment to the asset class.

He anticipates that only two to three of the 11 recently approved spot Bitcoin ETFs will achieve significant asset under management (AUM) and market success. In contrast, others may face challenges and potential withdrawal.

Sonnenshein on Grayscale’s Future

The Grayscale Bitcoin Trust ETF, the largest of its kind globally, has played a pioneering role in paving the way for cryptocurrency-related products. Sonnenshein emphasized the importance of factors like liquidity, track record, and the credibility of the issuer in attracting investors, positioning Grayscale as a specialist in the crypto space.

The competition among ETF providers intensifies as the cryptocurrency market undergoes rapid developments and increased institutional interest. While some issuers opt for lower fees to attract investors, Grayscale’s strategy revolves around emphasising its extensive experience and credibility in the market, even at a premium cost.

In Conclusion

Sonnenshein’s insights shed light on the dynamics within the growing Bitcoin ETF market, where factors beyond fees, such as reputation and history, play a pivotal role in shaping investor perceptions and decisions.