GRAYSCALE CEO PREDICTS STABILIZATION IN GBTC OUTFLOWS 

Michael Sonnenshein, the CEO of Grayscale, anticipates that the recent trend of investors withdrawing from the Grayscale Bitcoin Trust (GBTC) is nearing a plateau, suggesting a forthcoming balance after a phase of persistent divestment.

Since the introduction of spot Bitcoin ETFs in January, following the SEC’s approval, Grayscale has encountered increasing competition in the market. Sonnenshein attributed some of the recent GBTC outflows to the liquidation of assets by bankrupt cryptocurrency firms, including FTX, and investors switching their investments to other spot Bitcoin ETFs.

Sonnenshein pointed out during a Reuters podcast that the sell-off spurred by bankrupt crypto entities is largely concluded. Many of these entities, after declaring bankruptcy in 2022 and 2023, had to liquidate their GBTC shares post its ETF transition to settle debts, a move that has yet to be fully captured in outflow statistics.

Moreover, Grayscale’s ETF faces critique for its higher management fees of 1.5%, compared to the average fee of around 0.25% levied by many of its recent competitors. Despite this, Sonnenshein expressed confidence that the fees would decrease as the market matures.

Grayscale Experiences Significant ETF Outflows

Recent data from BitMEX Research reveals that GBTC has seen over $15 billion in outflows in the last quarter. Despite these withdrawals, the increase in Bitcoin’s price has sustained Grayscale’s assets under management at about $23.13 billion.

Although the rate of daily outflows has diminished from the March peak of around $600 million, significant outflows continue, with a $303 million withdrawal occurring just on Monday, as reported by BitMEX Research.

Looking ahead, Sonnenshein is optimistic about broadening Grayscale’s investor base and innovating its product offerings to remain competitive against new market entrants like BlackRock and Fidelity.

Grayscale is also striving to gain SEC approval to transform another of its products into a spot Ethereum ETF, with the SEC expected to announce decisions on similar applications by the end of May. Following a lawsuit against the SEC’s rejection of its spot Bitcoin ETF application in 2022, which Grayscale won, Sonnenshein remains hopeful for a positive outcome, positioning Grayscale on what he perceives as the “right side of history.”

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