Grayscale Investments, the crypto asset manager, has been competing to retain its dominance in the bitcoin exchange-traded fund (ETF) market after nine other issuers launched rival offerings approved by the US Securities and Exchange Commission (SEC).
Grayscale’s Bitcoin Trust (GBTC) has been experiencing outflows over the past few months, with total outflows topping $15 billion, according to data from BitMEX Research.
However, the surge in bitcoin’s value has helped ensure that Grayscale’s assets under management have only dipped slightly to $23.13 billion.
Despite the daily outflows currently falling well below the $600 million seen in March, they’re still in the red, with outflows of $303 million on Monday, according to BitMEX Research.
Grayscale CEO Michael Sonnenshein recently said that these outflows may be reaching an equilibrium, with some of the anticipated outflows behind them, such as some of the bankruptcy selling and investors undertaking switch trades.
Some of those outflows were the result of selling connected to the bankruptcy settlements of FTX and other defunct crypto companies, as well as investors selling the Grayscale ETF only to immediately buy another.
Many crypto companies that filed for bankruptcy in 2022 and 2023 had shares of Grayscale’s trust on their balance sheets and looked to sell those shares once the product converted to an ETF to repay creditors. However, this has yet to be fully reflected in flow data.
Grayscale has announced that it will seek approval from the SEC to spin off a still-unspecified portion of the ETF’s assets into a new, lower-fee Bitcoin Mini Trust.
While Grayscale currently levies a 1.5% percentage fee on its converted ETF, substantially larger than the average fee of about 0.25% charged by most of its newer rivals, with waivers reducing that still further, the company has declined to comment on what those fees would be.
BlackRock’s iShares Bitcoin Trust (IBIT.O), which has a fee of 0.12%, has pulled in some $17.8 billion in assets.
Sonnenshein suggested that Grayscale may take steps to compete with newer rival offerings from BlackRock, Fidelity, and others.
He also hopes to win SEC approval to convert another of its products into a spot ether ETF.
The SEC must rule on other similar proposals by late May.
Grayscale sued the SEC after it rejected its application for a spot bitcoin ETF in 2022, and an appeals court sided with Grayscale, ordering the SEC to reexamine its decision, which paved the way for the bitcoin ETF approvals in January.
As Sonnenshein looks ahead, he said that it’s more about bringing more investors into the ecosystem and continuing to innovate on the product front.
He remains optimistic that the SEC will permit those products to come to market, which will further increase the adoption and popularity of cryptocurrencies.
