According to Michael Sonnenshein, CEO of Grayscale Investments, the Grayscale Bitcoin Trust (GBTC) seems poised for a pivotal moment following a prolonged spell of outflows. In an interview with Reuters during the most recent episode of Inside ETFs, Sonnenshein discussed the hurdles and evolutions confronting GBTC.
Since 2013, Grayscale Investments has led the way in managing crypto assets. However, their leadership was challenged when the US Securities and Exchange Commission (SEC) approved nine other companies to offer Bitcoin ETFs on January 11. This regulatory decision marked the end of a long-standing impasse between the SEC and the crypto industry, leading to an influx of investment options and putting Grayscale’s market dominance in jeopardy.
Grayscale Bitcoin Outflows Coming To An End?
In the past quarter, GBTC saw more than $15 billion worth of investments being withdrawn. However, the rising price of Bitcoin has helped mitigate this loss for Grayscale, as their total assets under management (AUM) have only decreased slightly to around $23.13 billion.
In response, Sonnenshein stated, “We now think that the fund has begun to find a balance. Most of the expected outflows, such as those caused by bankruptcy sales or investor switch trades, have likely occurred.”
Some of Grayscale’s outgoings can be attributed to the bankruptcy filings of various crypto companies in 2022 and 2023. These companies owned GBTC shares prior to their financial collapse.
Transferring our trust into an ETF brought about a major shift with consequences for several parties, such as FTX and Genesis in their bankruptcy proceedings. Not surprisingly, this change caused a spike in withdrawals that is gradually slowing down.
The Grayscale CEO pointed out the change in investing patterns, mentioning an increasing number of investors selling off GBTC to buy Bitcoin ETFs from firms like BlackRock, Fidelity, and Bitwise instead. This move is primarily due to the more affordable fees offered by these competitors.
Although the company experienced significant daily withdrawals totaling $458.2 million over the past two days (Monday: $303.3 million and Tuesday: $154.9 million), the rate of these outflows is decreasing compared to the peak levels in March, where daily outflows reached approximately $600 million.
Sonnenshein similarly voiced his confidence in Grayscale’s impact and prospects within the ecosystem. “Looking forward,” he added, “it’s essentially about attracting more investors to this ecosystem and continually enhancing our offerings.”
In reaction to new Bitcoin ETF offerings from giants such as BlackRock and Fidelity, which have lower fees and quickly amassed large assets, Sonnenshein proposed that Grayscale might reduce its fees to keep up. “As the markets develop further,” Sonnenshein stated, “we expect GBTC’s fees will decrease.”
Based on recent figures from Arkham Intelligence, GBTC currently owns around 323,209.5 Bitcoins, equivalent to roughly $22.29 billion. This represents a substantial reduction from the over 618,000 Bitcoins it initially held at the year’s outset, highlighting the magnitude of the redemptions the trust has undergone.
At press time, BTC traded at $68,840.
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2024-04-10 15:11