After GBTC Outflows Hit $12B, Grayscale Promises Fee Reduction

Grayscale CEO Michael Sonnenshein has expressed optimism about fee reductions as outflows from the firm’s flagship product, the Grayscale Bitcoin Trust ETF (GBTC), hit a staggering $12 billion.

In an interview with CNBC, Sonnenshein addressed concerns over the higher-than-average fees associated with GBTC. He expressed confidence that fees would decrease over time as the crypto ETF market matures.

This concern emerged amid outflows exceeding $12 billion in Grayscale’s Bitcoin investment product since its conversion into an exchange-traded fund (ETF) in early January. This outflow trend was primarily attributed to the comparatively higher fees of its Bitcoin ETF product.

“I’ll happily confirm that, over time, as this market matures, the fees on GBTC will come down,” Sonnenshein remarked. Meanwhile, in the past, Grayscale firm had defended its costlier-than-market-average charges.

According to data from BitMEX Research, GBTC experienced its largest single-day outflow on Monday, with $643 million withdrawn. Moreover, the data shows that Grayscale’s ETF has recorded no positive flow since the inception of the Bitcoin spot ETF in the United States on January 11.

In contrast, other asset managers like BlackRock, Fidelity, Bitwise, and Ark Invest continue to witness notable positive inflow to their Bitcoin spot ETFs. Interestingly, the Grayscale CEO noted that the firm had anticipated the outflows, suggesting they came as no surprise.

CNBC cited market analysts who believe that the insolvency of crypto behemoth FTX played a significant role in the selloff of GBTC. Notably, FTX was a prominent holder of GBTC before filing for bankruptcy in 2022. It held approximately 22 million shares as of October 2022.

Meanwhile, after ETF approval, the FTX bankruptcy estate sold most of its shares in Grayscale’s Bitcoin ETF, which temporarily impacted the price of Bitcoin.