Michael Sonnenshein at the 2022 Forbes Iconoclast Summit at New York Historical Society on Nov. 3, 2022.
Arturo Holmes | Getty Images Entertainment | Getty Images
DAVOS, Switzerland — Grayscale Investments CEO Michael Sonnenshein told CNBC that most of the approved bitcoin exchange-traded funds won’t survive, while defending the highest fees in the market for the company’s own product.
When the U.S. Securities and Exchange Commission approved a swathe of spot bitcoin ETFs earlier this month, much focus was on the management fees that firms from BlackRock to Fidelity were charging.
Many of the ETF issuers were charging 0% fees for a limited amount of time before raising them slightly. Most of the approved ETFs have fees of between 0.2% and 0.4%.
But the Grayscale Bitcoin Trust ETF charges a 1.5% fee.
Sonnenshein laid out several reasons why it is charging that fee, including the fact it is the largest bitcoin fund, has a 10-year track record of “operating successfully” and has a diversified investor base.
“Investors are weighing heavily things like liquidity and track record and who the actual issuer is behind the product. Grayscale is a crypto specialist. And it has really paved the way for a lot of these products coming through,” Sonnenshein told CNBC in an interview at the World Economic Forum in Davos on Thursday.
Sonnenshein said the reason other ETFs have lower fees is that the products “don’t have a track record” and the issuers are trying to attract investors with fee incentives.
“I think from our standpoint, it may at times call into question their long-term commitment to the asset class,” Sonnenshein said.
The Grayscale CEO said two to three of the spot Bitcoin ETFs “will maybe obtain some kind of critical mass” of assets under management, but that the others may be pulled from the market.
“I don’t ultimately think that the marketplace will have ultimately these 11 spot products we find ourselves having,” Sonnenshein said.
Representations of cryptocurrency Bitcoin are placed on a PC motherboard in this illustration taken June 16, 2023.
Dado Ruvic | Reuters
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
SEC approves A highly anticipated and controversial decision finally arrived Wednesday, with the Securities and Exchange Commission allowing the creation of bitcoin exchange-traded funds in the U.S. that will give regular investors access to the world’s oldest and most popular cryptocurrency. The first funds are set to start trading on Thursday. The price of bitcoin, however, shed about 2%.
Wall Street ends higher U.S. stocks ended Wednesday’s trading session higher as investors awaited the start of earnings season later in the week and also inflation data. Jump in shares of Intuitive Surgical and Lennar boosted markets. In Asia, Japan’s Nikkei 225 index breached the 35,000 mark for the first time since February 1990.
China woos investors China has now vowed to make foreign investments easier, as was reported by state media. Chinese Vice Premier He Lifeng met with global financial executives Wednesday at a time China’s tensions with the U.S. and worries about its economic growth have kept investors wary of putting money into the country.
Inflation report awaited December inflation data, set to be released on Thursday, could very well challenge the market’s perception of how soon the Federal Reserve will start cutting interest rates and by how much. Consumer prices would’ve likely edged higher last month, with expectations by Dow Jones pointing to a 0.2% rise in the final month of 2023, and 3.2% increase for the full year.
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Bitcoin just received its biggest stamp of approval, giving crypto bros their most powerful bragging rights yet.
The decision by the SEC to approve the creation and trading of bitcoin ETFs will allow for better adoption of the world’s oldest cryptocurrency by mainstream finance.
Grayscale Bitcoin Trust, that holds about $29 billion of the cryptocurrency, will likely be converted into an ETF following the decision, while big Wall Street’s BlackRock and Fidelity will also enter the playing field.
“Today’s news is possibly Bitcoin’s biggest since its launch but the approval of spot ETFs shouldn’t be viewed in isolation, given the timing of the upcoming halving in April which cuts the BTC supply and historically kickstarts the new bull market. Both these events combined could well send Bitcoin to $100,000 in 2024,” said Antoni Trenchev, co-founder and managing partner of the digital asset firm Nexo.
Trenchev also noted that “there is a temptation to say the approval of spot Bitcoin ETFs is a buy-the-rumour, sell-the-news event.”
The decision comes a day after an official SEC social media account falsely said bitcoin ETF trading had been approved. The SEC confirmed that the account had been compromised.
Later in the day, investors will also shift focus towards consumer price data which is expected to show inflation edged higher in the last month of 2023.
This could potentially bring into question whether markets are getting ahead of themselves in anticipating rate cuts by the Fed. There still remains a wide gap between what the U.S. central bank has indicated in terms loosening its monetary policy and what the market is expecting.
The new Apple iPhone 15 on display inside the tech giant’s flagship store in Regent Street, central London. Picture date: Friday September 22, 2023. (Photo by Jonathan Brady/PA Images via Getty Images)
Jonathan Brady | Pa Images | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Losing steam Wall Street showed signs of losing steam Tuesday after a blistering rally last month, as two of its three main indexes ended lower for the second day. The Dow Jones Industrial Average closed 0.22% lower, while the S&P 500 inched down 0.06% by the closing bell. The Nasdaq Composite added 0.31% as technology shares led gains. Europe’s Stoxx 600 index closed 0.4% higher.
The most valuable Apple Apple’s market capitalization climbed back above $3 trillion for the first time since August. The iPhone maker climbed 2% to $193.42 per share on Tuesday and remains the most valuable publicly traded U.S. company. It officially surpassed the $3 trillion mark for the first time in June, and briefly touched the level on an intraday basis in December 2022. The company’s stock price has risen over 48% so far this year.
X.AI Elon Musk’s artificial intelligence startup X.AI has filed with the SEC to raise up to $1 billion in an equity offering. It has so far raised nearly $135 million from four investors, with the first sale occurring on Nov. 29.
Goldilocks’ porridge Job openings, a barometer of employer demand for workers, fell by 617,000 to 8.7 million in October, the lowest since March 2021, the U.S. Department of Labor reported Tuesday in a survey. Economists said the U.S. economy is now inching closer to a so-called “soft landing” after recent batches of better-than-expected data.
Bitcoin Bitcointopped $44,000 for the first time since April 2022 on Tuesday. The price of the world’s biggest cryptocurrency was last higher by more than 4% to $43,794.99, according to Coin Metrics, extending gains from the previous day. The digital coin is now up more than 160% for the year.
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So far December is not shaping up to be as slow as usual. Apple remains right on top of the food chain and Elon Musk is now raising fresh capital for his artificial intelligence startup.
As we approach the end of the year, it is yet another reminder that you can count on Big Tech to pull its weight in times when there really isn't much else to pave the way.
Wall Street's raging rally last month may start to show signs of cooling, but investors have no real reason to stop being optimistic while all the big buzz words of the year continue to be flashed in headlines — tech, AI, crypto.
Apple is resilient even as it grapples with slowing growth and problems in markets like China. On the other hand, new entrant X.AI will compete with the likes of ChatGPT creator OpenAI. It also has alumni of DeepMind, OpenAI, Google Research, Microsoft Research, Twitter and Tesla all working to build it.
News highs in bitcoin have become increasingly frequent over the past several weeks. Bernstein predicted about a month ago that the price of the world's most popular cryptocurrency could hit $150,000 by 2025 as excitement grows about a bitcoin exchange-traded fund.
And from an economic standpoint, things aren't looking as dreadful as they did earlier this year, as investors and economists debate whether we've finally reached the much discussed "soft landing."
Brookings Institution economists describe a soft landing as "'Goldilocks' porridge' for central bankers." In this scenario, the economy is "just right — neither too hot (inflationary) nor too cold (in a recession)," they said.
Cryptocurrency industry insiders predict bitcoin could hit a new all-time high in 2023 and possibly reach $100,000. It comes after a noted investor bet that the digital currency could go to $1 million in 90 days.
Chris Ratcliffe | Bloomberg | Getty Images
Bitcoin has rallied nearly 70% so far this year — and industry insiders who spoke to CNBC remain bullish, with one saying the world’s biggest cryptocurrency could reach new heights.
Bitcoin previously hit its all-time high of $68,990.90 in November 2021. Since then it has fallen about 60%.
Marshall Beard, chief strategy officer at U.S.-headquartered cryptocurrency exchange Gemini, said $100,000 could be a possibility for bitcoin.
“I think bitcoin probably breaks all-time highs this year,” Beard said, adding that the $100,000 price figure is an “interesting number.”
Beard said that if bitcoin gets to its previous record high of near $69,000, “it doesn’t take much more for it to lift up” to $100,000.
Bitcoin would need to rally around 270% to hit $100,000.
Paolo Ardoino, chief technology officer at stablecoin issuer Tether, said bitcoin could “retest” its all-time high near $69,000.
Bitcoin proponents say this is evidence that bitcoin is offering an alternative to the traditional banking system as a place for people to keep their money safe.
“I think the rally is explicable by saying, people have got freaked out by the banking system by the collapses,” Oliver Linch, CEO of Bittrex Global, told CNBC in an interview at Paris Blockchain Week on Thursday.
For many years, bitcoin advocates have argued bitcoin is a form of “digital gold” — a safe-haven asset that can provide investors a hedge against inflation and an investment in times of turmoil. But over the past few years, bitcoin has traded in correlation with stocks, in particular the tech-heavy Nasdaq.
There are now signs of decoupling with bitcoin massively outperforming the Nasdaq, many other risk-assets and gold this year.
But bitcoin also got a boost on hopes the banking crisis maybe reduce the U.S. Federal Reserve’s ability to be as aggressive on interest rate rises, which would be supportive for risk assets like cryptocurrencies.
Discussion of where the digital coin’s price could go this year has been rife since Balaji Srinivasan, an investor and the former technology chief at Coinbase, wagered on Mar. 17 that bitcoin would be worth $1 million or more in 90 days. He bet $2 million.
The wager was in response to a Twitter user who said that they would bet $1 million that the U.S. does not enter hyperinflation.
Srinivasan argued that the “world redenominates on Bitcoin as digital gold” as hyperinflation kicks in, erodes the value of the U.S. dollar, and nations, individuals and companies begin to buy large amounts of bitcoin. Hyperinflation is the massive rise in prices in an economy.
I think for bitcoin to be a million dollars in 90 days, some crazy things are happening in the world, which we don’t want.
Marshall Beard
Chief strategy officer, Gemini
A $1 million price on bitcoin would represent a roughly 3,600% increase from the digital currency’s current price.
Most people have poured cold water on this prediction.
Gemini’s Bear said “there’s probably a world where bitcoin hits a million dollars” but not in 90 days as Srinivasan wagered.
“I think for bitcoin to be a million dollars in 90 days, some crazy things are happening in the world, which we don’t want,” Beard said, adding that it could take 10 years to get anywhere near that figure.
Tether’s Ardoino echoed the sentiment that if bitcoin were to hit $1 million in 90 days, it would likely mean an unusual economic event.
“I’m kind of skeptical about that, because honestly, I wouldn’t even hope for that,” Ardoino told CNBC in an interview at Paris Blockchain Week, that aired Thursday.
“Because if bitcoin would reach such a high price level, [it] would mean that the entire economy will crumble. I’m not sure [that] is the world that we want to live in.”
There’s something about the latest crypto crash that makes it different from previous downturns.
Artur Widak | Nurphoto | Getty Images
The ongoing crypto winter is “only going to get worse” as the industry recalibrates to a higher interest rate world, according to the co-founder of blockchain platform Tezos.
Asked about the fall in price of many crypto assets this year, Kathleen Breitman said: “A lot of this was inflated on cheap money, and a lot of this was backed by basically, like, VCs trying to pump.”
“There was a lot of easy money going into the system and I think it was artificially stoking a number of different things, mainly valuations of these companies,” she told CNBC’s Karen Tso Wednesday at the Web Summit conference in Lisbon, Portugal.
Breitman cited NFT marketplace OpenSea, where trading volume plunged from $2.9 billion in September 2021 to $349 million in September 2022, according to data from Dune Analytics.
“Clearly there is a phenomenon that has kind of crested and gone away in a lot of these markets, but meanwhile they’re saddled with a $13 billion valuation,” Breitman said.
“So I think there’s a lot of cheap money that went in, valuations went super sky high, you had people scrambling to make those valuations justified in some form, usually through cheap tactics like yield farming, and now that the easy money’s gone away, all that’s left is we’re getting communities, I hope,” she continued.
On whether the pause in Federal Reserve rate hikes that economists expect next year could see crypto markets rally, Breitman said there would still be a shift in crypto and tech valuations being based on anticipatory benefits to actual user growth; and without the ability to keep using “cheap tactics” to get “easy come, easy go” users in the door.
“Crypto hasn’t been evaluated by that metric, and neither has technology in the last 10 years that we’ve had low interest rates,” Breitman told CNBC. “It remains to be seen, but basically I think what you’ll find is the things that are useful are going to thrive.”
“But that’s the small minority of crypto applications, whether people want to admit it or not.”
Tezos, which Breitman also co-founded, is a smart contract platform, like the better-known Ethereum, but that allows token holders to vote on changes to the platform before they are enacted every few months.
Usage of the network has increased on 2021, Breitman said, driven by demand from the art world, where digital artists are minting art on the blockchain and trading it. This use is providing one of the only sources of organic growth in the industry more broadly, she said.
The notion of the end of the era of easy money in crypto is one that analysts have been discussing in recent months amid the downturn.
Some industry figures believe the recent relative price stabilization of assets such as bitcoin, which has been trading between $18,000 and $25,000 for the last four months after experiencing massive volatility, is positive for the industry.
Antoni Trenchev, co-founder of crypto lender Nexo, previously told CNBC bitcoin’s performance was “a strong sign that the digital assets market has matured and is becoming less fragmented.”
Correction: The text of this story been been updated to accurately describe Kathleen Breitman’s job title.
