Grayscale CEO Predicts Failure for Most Bitcoin ETFs

The majority of the 11 spot bitcoin ETFs approved by the U.S. Securities and Exchange Commission (SEC) are likely to fail, according to Grayscale CEO Michael Sonnenshein in a conversation with CNBC.

He believes that only “two or three exchange-traded funds might achieve some critical mass.”

“I do not think that ultimately the market will sustain those 11 spot products approved by the SEC,” noted Sonnenshein.

Grayscale manages one of the largest bitcoin ETFs — GBTC, which oversees assets worth over $25 billion. In total, spot exchange-traded funds in digital gold have locked up about $27 billion or 632,000 BTC.

Most issuers initially set a zero fee in the early days of trading the product, later increasing it to 0.2-0.4%. However, Grayscale charges a 1.5% management fee.

According to Sonnenshein, the company set such a fee because the fund has “a 10-year track record of success” and “a diversified investor base.”

“Investors place great value on things like liquidity and the track record of the issuing firm, as well as which actual issuer is behind the fund. Grayscale is a cryptocurrency specialist. And our actions have truly paved the way for the emergence of many of these products,” added the head of the management company.

Sonnenshein emphasized that the reason for the low fees of other ETFs is the lack of reputation.

Nevertheless, GBTC is experiencing daily outflows, losing $1.5 billion over the past week. Analysts linked this situation to profit-taking by investors who purchased the product at a significant discount before its conversion into an ETF.

In the first four days after launch, the combined trading volume of all spot bitcoin funds reached $11 billion.