CEO of the largest Bitcoin ETF says not all managers will survive

Michael SonnensheinCEO of Grayscale, doesn’t believe there is room in the US market for that many cash Bitcoin ETFs. Last week, the SEC approved 11 ETFs from different managers, and it’s likely others will embark on this journey as well.

At the time of writing, Grayscale can proudly say that it has the largest Bitcoin ETF of them all: GBTC. In total, the manager has 581,000 bitcoins in custody, an amount equivalent to R$120 billioneasily leading the dispute.

The problem, however, is that Grayscale’s fund was founded in 2013. Without major competitors, the manager managed to dominate the market, but the game seems to be changing. About 36,000 bitcoins (R$7.4 billion) have been withdrawn from GBTC in recent days.

Grayscale’s CEO defends the high fees charged by his ETF

Because they are similar products, the managers behind Bitcoin ETFs do not have many strategies to promote their products. There is currently a war being waged over interest rates.

For example, the giant BlackRock charges 0.25% per year and offers zero fees for the first $5 billion into its fund. Ark Invest, Bitwise and Fidelity charge 0.21%, 0.2% and 0.25% per year respectively.

All other managers are competitive on fees and all charge less than 1%. The only exception is Grayscale, which charges its customers 1.5% per year.

Before the fund was converted into an ETF, the costs were 2%. In other words: there was a decline, but the outflow of thousands of bitcoins in recent days shows market dissatisfaction. Grayscale CEO Michael Sonnenshein defended his ETF’s high fees in a conversation with CNBC.

“Investors are heavily weighing things like liquidity and track record and who the real issuer behind the product is. Grayscale is a cryptocurrency specialist. And it really paved the way for a lot of these products to come in.”Sonnenshein told CNBC in Davos, citing GBTC’s 10-year history.

For now, this is the second largest ETF BlackRock IBITfollowed by Marry FBTC and with BITB from Bitwise. In total, the funds have 1 billion dollars, $874 million It is $354 million in Bitcoin, respectively. A very big difference $25.5 billion worth of Bitcoin from Grayscalebut it is decreasing.

Grayscale still dominates ETFs with GBTC, but other managers such as BlackROck, Fidelity, Bitwise and Ark are growing.  Source: Het Blok.
Grayscale still dominates ETFs with GBTC, but other managers such as BlackROck, Fidelity, Bitwise and Ark are growing. Source: Het Blok.

VanEck, which had an interesting marketing strategy and promised to donate part of its ETF’s profits to Bitcoin developers, appears in seventh place with the ETF called HOLD.

Grayscale says the market doesn’t have room for so many identical products

As the pioneer and until then leader of the Bitcoin ETF market, Grayscale is skeptical about the future of its competitors. Still in the conversation with CNBC, Michael Sonnenshein noted that not everyone will survive.

“I don’t believe the market will have these eleven products in sight that we have”Grayscale’s CEO told CNBC, believing some ETFs will die.

Finally, it is worth remembering that Grayscale belongs to the Digital Currency Group (DCG). Last year, the group was involved in several controversies, the most notable being the bankruptcy of Genesis, which caused a domino effect on the market.

Bitcoin is in decline, but the decline could have been bigger without ETFs, says Bloomberg expert

Even with the adoption of ETFs and with money inflows exceeding outflows, Bitcoin remains under pressure. At the time of writing, BTC is trading at $41,400, down 2.4% in the last 24 hours and 10% in the last 7 days.

As for price, Eric Balchunas, ETF expert at Bloomberg, noted that ETFs represent a small portion of the market. So the decline could have been much greater if the ETFs had not been approved.

“Never in my life have I seen an inflow of $2 billion and prices drop. Either your reported numbers are incomplete, or you just posted the wrong data haha”said a follower of Balchunas, criticizing his data.

“Think about this: Stocks are sold all the time, even though the ETFs that own them receive billions in inflows. If? Because it is a large market, ETFs are minority owners. That said, ETF flows do have an impact: They help make the selloff less severe. Same deal here.”

Finally, it is worth considering that Bitcoin has experienced a 62% increase in the last months of 2023. Therefore, many investors can take their profits at this time. Either way, ETFs should have a big positive impact in the long run.

Source: Live Coins