Grayscale CEO warns that the ongoing fee competition among spot Bitcoin ETFs won’t prevent these funds from facing eventual withdrawals from the market. Despite the fee war, he expresses skepticism about the long-term sustainability of these ETFs.
In his view, the fee reductions might attract attention temporarily, but the fundamental challenges and uncertainties surrounding the spot Bitcoin ETF market could still lead to the eventual withdrawal of these funds. The CEO emphasizes the importance of addressing the broader issues to ensure the stability and longevity of spot Bitcoin ETFs in the market.
Grayscale CEO Predicts Challenges for Approved Spot Bitcoin ETFs
Grayscale CEO, Michael Sonnenshein, has voiced skepticism about the long-term viability of the recently approved spot Bitcoin ETFs by the United States Securities and Exchange Commission (SEC). In an interview at the World Economic Forum, Sonnenshein predicted that a majority of the 11 approved spot Bitcoin ETFs might face challenges and not survive in the competitive market.
The U.S. SEC officially greenlit 11 spot Bitcoin ETFs on January 10, and most of them commenced trading the following day. To enhance competitiveness, many ETF issuers were reducing their trading fees, with the approved ETFs typically ranging between 0.2% and 0.4%. Some providers even implemented temporary fee waivers.
Contrastingly, Grayscale, the largest Bitcoin holder among spot Bitcoin ETF issuers, maintains a fee structure of up to 1.5% without any temporary waivers. Sonnenshein’s remarks suggest concerns about the sustainability of these ETFs despite the fee adjustments made by other issuers.
Grayscale CEO Raises Doubts on Long-Term Viability of Spot Bitcoin ETFs
Grayscale CEO Michael Sonnenshein has expressed skepticism about the sustained success of the recently approved spot Bitcoin ETFs, noting that only two or three are likely to endure, while the others may face withdrawal from the market. Sonnenshein questioned the long-term commitment of some issuers to the asset class and cast doubt on the existence of all 11 spot products in the marketplace.
These remarks came on the fifth day of spot Bitcoin ETF trading in the U.S., during which Grayscale has notably been selling Bitcoin aggressively, offloading around 37,947 BTC by January 18. In contrast, other issuers have added over 40,000 BTC to their products since the commencement of trading.
Mati Greenspan, founder of Quantum Economics, suggested that the long-term failure of most ETF issuers is plausible, as investors may prefer to retain control of their assets through self-custody.
However, some executives at spot Bitcoin ETF issuers argue that self-custody and ETFs are not mutually exclusive. ARK Invest CEO Cathie Wood stated during X Spaces on January 10 that their Bitcoin ETF, which charges a 0.21% fee, aims to treat Bitcoin as a public good rather than maximizing profits. Wood emphasized that self-custody and ETFs can coexist, providing investors with low-fee options.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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