Greyscale CEO: BTN ETF flows ‘balance’ as GBTC continues to exit

Since US spot Bitcoin ETFs began trading in January, Greyscale's GBTC has seen billions of dollars in outflows. But Michael Sonnenschein, the firm's chief executive, says outflows from the fund are approaching “balance”.

Speaking to Reuters Inside ETFs, Sonnenschein said GBTC is “starting to reach a bit of an equilibrium” and argued that outflows from the fund were “predictable”. He pointed to the sell-off associated with the losses of FTX and other crypto companies, arguing that “some investors are probably doing switch trades” and that the phase is largely “behind us.”

“We knew going into this and we thought there would be some exits,” he said, adding that “GBTC is the container that has been in some of the bankruptcy states around the crypto ecosystem.” Those leaks were “forced,” he said.

GBTC charges a fee of 1.5%. But rival Bitcoin ETF fees are as high as 0.25% — and most funds offer low fees when they first launch, or none at all.

Sonnenschein argued that “payments will be slightly higher when new categories or new exposures are opened,” adding, “We expect GBTC fees to decrease as this market matures.”

Meanwhile, Grayscale is suing a Bitcoin “mini-trust” to stem the flow from its core product, pending regulatory approval for what Sonnenschein called “a low-cost offering that we think we can bring to market.” .

He pointed to Greyscale's “entire product family,” noting that investors are growing their crypto holdings beyond Bitcoin and Ethereum. “Looking forward, again, it's about bringing more investors into the ecosystem, continuing to innovate on the product front, and how can we attract more investors to this ecosystem,” he said.

GBTC exits show no signs of letting up, with almost $155 million leaving the fund yesterday, driving all Bitcoin ETFs to a negative $18.6 million, according to data from Farside Investors. According to Greyscale's website, GBTC holds more than 318,451 BTC, up from 618,000 BTC at the beginning of the year. Daily outflows from the fund are currently $261.7 million, and if the fund's current rate of outflows continues, it is expected to run dry of bitcoins by early July.

“Time will tell,” Sonnenschein replied when asked if Grayscale would remain independent in the next few years.

Edited by Stacy Elliott.