JPMorgan: GBTC outflows unexpectedly high, downward pressure on Bitcoin should be over

JPMorgan analysts stated that as the profit-taking in GBTC has largely ended, there is limited downside for Bitcoin. However, they also cautioned that unless fees are reduced in the near future, GBTC may continue to see outflows.

GBTC Fund Outflows Exceed Expectations, Downward Pressure Likely Over

According to a report by The Block, JPMorgan had previously estimated that Grayscale's GBTC would see outflows of $3 billion. However, the outflow has far exceeded this amount, as JPMorgan analyst Nikolaos Panigirtzoglou wrote in a report on Thursday:

The profit-taking situation in GBTC has essentially occurred. Conversely, this also means that the significant downward pressure it exerted on Bitcoin should now be over.

Bloomberg ETF analyst Eric Balchunas also noted yesterday that GBTC trading volume has been declining since January 19, which could be a sign of selling pressure being exhausted.

GBTC Faces Outflow Risk Without Lowering Prices

JPMorgan stated: Grayscale's Bitcoin ETF seems to have two emerging competitors: Blackrock's iShares and Fidelity, which have attracted $1.9 billion and $1.8 billion in inflows respectively. Furthermore, their fees are much lower, at only 0.25% without exemptions, while GBTC's fees are as high as 1.5%.

However, JPMorgan also mentioned that if GBTC's plan to launch The Grayscale Bitcoin Trust Covered Call ETF, a strategy combining GBTC spot with options, is approved, it will have a boosting effect on the fund and the Bitcoin derivatives market.

Bitcoin Spot ETF Enhances BTC Price Discovery

The report points out that the recent introduction of a Bitcoin spot ETF in the United States adds a new dimension to Bitcoin price discovery, aligning it with traditional markets.

Analysts stated: While on the surface the introduction of a Bitcoin spot ETF signifies more diversification, in reality, guided by the experience of traditional asset class ETFs such as stocks, it will increase market depth and liquidity.

We anticipate that the emergence of a Bitcoin spot ETF will make the price discovery process for Bitcoin more efficient.