Grayscale CEO Michael Sonnenshein resigns as spot BTC ETF inflows rebound

Grayscale Investments CEO Michael Sonnenshein has resigned from the asset manager amid mass investor departures from the firm’s GBTC ETF. 

On May 20, the Wall Street Journal reported that Peter Mintzberg will replace Sonnenshein as the company’s head in August. Mintzberg is a financial veteran with decades of experience as Goldman Sachs’s global head of strategy for the bank’s asset management operations. 

Grayscale did not immediately respond to commentary requests from crypto.news. 

The development comes on the heels of a possible trend reversal for Grayscale’s converted GBTC fund, which saw its first weekly net inflows in some 19 trading weeks last week. As Fineqia International research analyst Matteo Greco shared with crypto.news, GBTC garnered $31.6 million in net inflows between May 13 and May 17. 

However, last week’s GBTC flows were a drop in the pond compared to around $17.6 billion worth of exits since January, when the U.S. Securities and Exchange (SEC) approved spot Bitcoin (BTC) ETFs.  

At press time, it was unclear how this Grayscale exodus impacted Sonnenshein’s decision to step down as CEO. Still, previous reports showed that the investment giant lost 50% of its assets under management in less than six months of GBTC’s switch from a trust to an exchange-traded fund. 

Spot Bitcoin ETFs scored $950 million in net inflows last week

According to Greco, GBTC was not the only U.S. spot BTC ETF to attract investor capital last week. The pack of 11 funds issued by Grayscale, BlackRock, Fidelity, ARK 21Shares, Bitwise, Invesco Galaxy, VanEck, Valkyrie, Franklin Templeton, WisdomTree, and Hashdex amassed a cumulative $950 million in weekly net inflows, per SoSoValue analytics.

Greco noted that the renewed interest buoyed Bitcoin’s price by 7% within the week, as the largest digital asset closed around $66,300. This followed low daily volatility and five weeks of modest spot BTC ETF demand. 

Spot Ethereum ETF scenarios

With a rebound in spot Bitcoin ETF inflows and Bitcoin’s price recovery, the Fineqia International analyst opined that attention will also expand to spot Ethereum (ETH) ETFs. 

The U.S. SEC is scheduled to finalize its decision on filings from VanEck and ARK 21Shares on May 23 and May 24 respectively. “Market participants expect the SEC to withhold approval for these products, despite approving BTC ETFs in January,” Greco explained, echoing predictions from Bloomberg experts.

Concerns over the liquidity of ETH’s spot and futures markets, along with its previous classification as a security by the SEC, contribute to skepticism about swift approval. If rejected, issuers would need to resubmit filings, potentially leading to approval in Q4 2024 or Q1 2025 at best.

Matteo Greco, Fineqia International research analyst

Conversely, the SEC could also approve 19b-4 filings but delay greenlighting S-1s. 19b-4 forms are used to propose rule changes with the SEC, while S-1s represent registration statements required of firms before publicly offering securities. 

The SEC must approve both firms before spot Ethereum ETFs can trade on U.S. national exchanges. Greco noted that if the SEC takes this route, the commission could leverage the time to further assess the Ethereum market and possibly conclude on ETH’s status as a security or not.