There are a lot of new bitcoin exchange-traded funds (ETFs) coming out, but Michael Sonnenshein, CEO of Grayscale Investments, thinks most of them won’t make it.
Sonnenshein told CNBC this week, “I’d be surprised if more than two or three of these things actually get some kind of foothold in the market.” So far, 11 spot bitcoin ETFs have been accepted in the U.S., but he thinks that the rest may be taken away in the future.
Sonnenshein justified the expensive 1.5% fee that the Grayscale Bitcoin Trust charges. The Grayscale Bitcoin Trust is still the biggest bitcoin fund in the world, with over $25 billion in assets under management (AUM).
In his defense, he said that the trust had earned its high fees after 10 years of successful operations and growing its investor base beyond bitcoin fans.
After years of Grayscale being the only approved bitcoin fund, a lot of new bitcoin ETFs have come out. However, Sonnenshein thinks that new companies will find it hard to compete with the company because it was the first to market, is big, has a history of running businesses, and has a well-known name.
New place As the cryptocurrency market has grown older over the past year, bitcoin ETFs have become very popular very quickly. But a lot of them don’t do anything different besides charging smaller fees.
Sonnenshein says that this lack of difference could mean that all but a few of them go away if they don’t get enough AUM.
Grayscale is getting more and more bad press for having higher management fees than the new spot bitcoin ETFs that are coming out. But Sonnenshein gave a number of important reasons for Grayscale’s high prices:
- Grayscale is the biggest bitcoin fund in the world, so it gets economies of scale that other companies don’t have yet.
- The trust has been running smoothly for more than 10 years, showing that it can handle many rounds of economic growth and decline.
- It has investors from a wide range of backgrounds, not just bitcoin fans. It now gets more than 25% of its money from retirement savings.
- The trust was the first to allow people to trade bitcoin in a regulated way, making it possible for others to follow.
Grayscale’s Bitcoin Trust and other investment goods have continued to grow quickly, even though its fees have been criticized. They let you invest in cryptocurrencies through tax-advantaged retirement accounts, which is something that bitcoin ETFs can’t do yet.
Even though fees for bitcoin ETFs may go down over time, Grayscale’s CEO thinks the company will remain at the top of the market for years to come because it was the first to offer bitcoin ETFs, has a long history of operations, is big, and has a well-known name.
Traders may like new choices right now, but the long-term picture is still unclear because bitcoin is still becoming more well-known as an asset class among both large and small investors.