Bitcoin’s price could face additional downside pressure in the coming weeks if investors in Grayscale Bitcoin Trust continue to take profits, according to JPMorgan.
GBTC was converted into a Bitcoin exchange-traded fund (ETF) last week and has already seen over $1.5 billion worth of outflows. Last week, JP Morgan estimated up to $3 billion in outflows from GBTC as speculative investors are likely to book profits.
“If the previous estimate of $3 billion turns out to be correct and given that $1.5 billion has already exited, there could be an additional $1.5 billion to exit the Bitcoin space through profit taking on GBTC, thus putting further pressure on Bitcoin prices over the coming weeks. JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a note on Thursday.
GBTC investors — who had been buying shares of the fund over the past year at a significant discount to net asset value to put into the eventual ETF conversion — “captured the full profit after the ETF conversion by exiting the Bitcoin space entirely rather than switching to Bitcoin ETFs,” the analysts said. Cheapest instant.
GBTC outflows are also increasing pressure on the fund to lower its fees, analysts said, reiterating their view that the current 1.5% fee is “too high” compared to other spot bitcoin ETFs.
Analysts noted that GBTC “risks further outflows” even if, for some institutional investors, fees are not the only reason to consider when deciding whether to switch to cheaper spot bitcoin ETFs.
“Liquidity and market depth are also important, but again there is risk for GBTC on that front as well if other spot bitcoin ETFs can reach critical mass in terms of size and liquidity,” they said, adding that an additional $5 billion to $10 billion could be expected. You could exit GBTC if you lose your liquidity advantage.
Limited chance of spot Ethereum ETF approval by May
Last week, Panigirtzoglou told The Block that JPMorgan sees no more than a 50% chance of an Ethereum spot ETF being approved by May, the first deadline for the SEC to rule on pending applications for such funds.
Reiterating that view in today’s report, JPMorgan analysts said that while they are “sympathetic” to arguments pointing to potential approval, they are skeptical that the SEC will classify Ethereum as a commodity as soon as May.
“If anything, with Ethereum moving from proof-of-work to proof-of-stake and the negative impact of this shift on Ethereum’s decentralization, Ethereum is looking more similar to other cryptocurrencies outside of Bitcoin, which are considered securities by the SEC.” Analysts said.
Furthermore, the analysts concluded that the SEC’s ongoing lawsuits against cryptocurrency exchanges that offer staking services for proof-of-stake blockchains, including Ethereum, make immediate approval of an ETH ETF “at least more difficult.” Until these lawsuits are resolved.”
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