Grayscale CEO Expects GBTC Outflows to ‘Reach Equilibrium:’ Report

Grayscale CEO Michael Sonnenshein predicted that outflows from the Grayscale Bitcoin exchange-traded fund (GBTC) will stabilize and reach an equilibrium.

Grayscale has been facing stiff competition in the spot Bitcoin exchange-traded fund (ETF) market since January, when the U.S. Securities and Exchange Commission (SEC) approved the product.

Grayscale CEO Sees Outflows Reducing

According to Sonnenshein, in a recent Reuters podcast, some of Grayscale’s outflows were due to selling linked to the bankruptcy settlements of FTX and other defunct crypto companies. Additionally, some investors sold Grayscale ETF shares to purchase other spot Bitcoin ETFs.

However, Sonnenshein mentioned that selling related to bankrupt crypto companies like FTX is “largely behind us.” Numerous such entities that filed for bankruptcy in 2022 and 2023 had shares of Grayscale’s former trust on their balance sheets and sought to sell them after the product transitioned to an ETF to repay creditors. Yet, this aspect has not been fully reflected in the flow data.

Grayscale has also been subject to higher fees than other ETFs. The digital asset investment manager charges a 1.5% fee on its converted ETF, which is higher than the average of approximately 0.25% charged by most newer competitors, even with waivers further reducing it.

Sonnenshein anticipates that as markets mature, the fees for GBTC will decrease over time.

Grayscale ETF Outflows Exceed $15 Billion

Data from BitMEX Research show that the total outflows from the Grayscale Bitcoin Trust (GBTC) have surpassed $15 billion over the past three months. Despite the high outflow, the surge in Bitcoin’s value has helped maintain Grayscale’s assets under management at around $23.13 billion.

Although daily outflows have decreased from the peak of approximately $600 million seen in March, they remain substantial. On Monday alone, Grayscale experienced outflows totaling $303 million, according to BitMEX Research.

Sonnenshein mentioned that they are looking forward to expanding the investor base and continuing product innovation. He hinted that Grayscale may take measures to compete with newer offerings from companies like BlackRock and Fidelity.

Furthermore, Grayscale aims to secure SEC approval to convert another of its products into a spot Ethereum ETF. The SEC is expected to make rulings on similar proposals by late May. Grayscale previously sued the SEC after its application for a spot Bitcoin ETF was rejected in 2022, and the court ruled in their favor.

Sonnenshein expressed his optimism about the SEC’s decision, believing that they will ultimately permit the products to enter the market, aligning with what he sees as the “right side of history.”