JPMorgan Anticipates End to Bitcoin ETF Selling Amidst Price Volatility
JPMorgan Analysts recently stated that outflows from Grayscale’s Spot Bitcoin Converted ETF (GBTC) are “largely behind us,” signifying an end to downward pressure on the price of bitcoin. The note followed just after JPMorgan CEO Jamie Dimon put forward a wild Satoshi Nakamoto hypothesis.
Given that $4.3 billion has already been withdrawn from GBTC, we conclude that GBTC profit-taking has already occurred.”
JPMorgan analysts, led by Nikolaos Panigirtzoglou
Since the launch of a number of Bitcoin spot exchange-traded funds (ETFs) this month, the price of Bitcoin has seen dramatic fluctuations. The note by JPMorgan was released after three U.S. Bitcoin spot ETFs were launched.
Understanding JPMorgan’s Analysis
The market’s largest Bitcoin investment vehicle, GBTC, has had notable withdrawals totaling more than $4.3 billion since the launch of the new funds. JPMorgan’s analysis suggests that these outflows are now subsiding. “There appears to be two emerging competitors to Grayscale’s Bitcoin ETF: BlackRock and Fidelity,” the investment bank said, pointing to the two companies that have drawn sizable inflows.
The bulk of the downward pressure on bitcoin from this channel should be largely behind us.
JPMorgan Analysts added, led by Nikolaos Panigirtzoglou
The Role of BlackRock’s IBIT and Fidelity’s FBTC
Due to their lower prices, investors have shifted some of the money from Grayscale’s GBTC to competing spot Bitcoin ETFs. As of right now, Fidelity’s Wise Origin Bitcoin Fund (FBTC) has recorded a net inflow of around $1.8 billion, while BlackRock’s iShares Bitcoin Trust (IBT) has witnessed an inflow of roughly $1.9 billion.
Blackrock and Fidelity’s costs are far lower, just 25 basis points (without waivers) compared to 150 basis points for GBTC. The JPMorgan analysts stated that outflows may quicken and “reach critical mass” if Grayscale doesn’t raise its prices to a more competitive level. Grayscale has not publicly commented on its plans to adjust fees in response to competition from these new ETFs.
A January 26 Matrixport research report predicted that Bitcoin will fall to the support level of $36,739, and the price will rebound from this support level, as the overall liquidity and macro environment remain supportive. It noted that TradeFi’s interest in a Bitcoin spot ETF…
— Wu Blockchain (@WuBlockchain) January 26, 2024
The report highlights the recent resurgence of interest from traditional financial institutions (TradFi) and several institutional investors in Bitcoin ETFs. Despite the price volatility, JPMorgan believes that this renewed interest could contribute to long-term growth for Bitcoin and the broader crypto ecosystem.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information