April 19, 2024
spot bitcoin etf
Bitcoin ETF

Grayscale CEO: Majority of Spot Bitcoin ETFs Won’t Survive

In a recent interview at the World Economic Forum in Davos, Switzerland, Grayscale Investment CEO Michael Sonnenshein shared his prediction that most of the spot Bitcoin exchange-traded funds (ETFs) approved by the United States Securities and Exchange Commission (SEC) are destined to fail. Sonnenshein’s remarks come just days after the SEC officially approved 11 spot Bitcoin ETFs on January 10, with 10 of them commencing trading the following day.

Despite the rush of ETF issuers to lower their trading fees for competitiveness, Grayscale, the largest Bitcoin holder among spot Bitcoin ETF issuers, charges as much as 1.5% without any waivers. Sonnenshein defended Grayscale’s fees, emphasizing that only two or three spot Bitcoin ETFs are likely to endure, while the rest will exit the market.

“I think from our standpoint, it may at times call into question their long-term commitment to the asset class […] I don’t ultimately think that the marketplace will have ultimately these 11 spot products we find ourselves having,” stated Sonnenshein.

Grayscale’s unique approach to fees contrasts sharply with other issuers, leading to speculation about the long-term viability of such a large number of spot Bitcoin ETFs in the market. Grayscale’s aggressive selling of Bitcoin, offloading 37,947 BTC by January 18, has raised eyebrows, especially considering that other issuers have added at least 40,000 BTC to their products since the start of trading.

Quantum Economics founder Mati Greenspan supports the idea that most ETF issuers may struggle in the long term, as investors may prefer to hold their assets or choose self-custody. Greenspan suggests that the proliferation of 11 spot Bitcoin ETFs is excessive, and consolidation is likely in the future, given the current trend of lowering fees.

Despite concerns about the crowded market, some executives at spot Bitcoin ETF issuers believe there is no conflict between self-custody and ETFs. ARK Invest CEO Cathie Wood emphasized that self-custody and an ETF are not mutually exclusive during a recent discussion on X (formerly Twitter). Wood highlighted ARK’s Bitcoin ETF, charging a fee of 0.21%, as a low-fee product aimed at treating Bitcoin as a public good rather than maximizing profits.

Image by 3D Animation Production Company from Pixabay

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