According to JPMorgan, the pressure on Bitcoin’s price has eased up a bit. This change is linked to the recent activities surrounding the Grayscale Bitcoin Trust (GBTC). GBTC has experienced a significant amount of money being withdrawn – about $4.3 billion – since it was converted into a spot bitcoin exchange-traded fund (ETF) two weeks ago. This amount is more than JPMorgan’s initial estimate of $3 billion. The analysts at JPMorgan, led by Nikolaos Panigirtzoglou, suggest that most of the profit-taking by GBTC investors has already happened.
In the past two weeks, Bitcoin’s price fell by over 20% following the approval of spot Bitcoin ETFs in the U.S. This drop was primarily due to GBTC investors cashing in their profits. However, JPMorgan analysts believe that the worst of this downward trend may be over. They warn that if GBTC doesn’t reduce its 1.5% fee soon, it might continue to see money leaving the fund and lose market share to its competitors.
JPMorgan points out that Grayscale’s bitcoin ETF faces competition from Blackrock and Fidelity, which have attracted $1.9 billion and $1.8 billion in inflows, respectively. These competitors charge significantly lower fees – only 25 basis points – than GBTC’s 150 basis points.
The introduction of spot bitcoin ETFs in the U.S. is seen as a positive step for determining Bitcoin prices. This aligns Bitcoin more closely with traditional markets, like equities, where ETFs are common. The JPMorgan analysts believe that even though this could mean more market fragmentation, it would likely increase market depth and liquidity. They expect that spot Bitcoin ETFs will make the process of determining Bitcoin prices more efficient.
Finally, GBTC plans to launch a covered call ETF, which, if approved, could benefit both the fund and the Bitcoin derivatives markets, according to the JPMorgan analysts.
