Bitcoin BTC has fallen more than 15% since the inaugural launch of exchange-traded funds (ETFs) last week with an inflow of $1.5 billion from Grayscale Bitcoin Trust GBTC, financial giant JPMorgan (JPM) said in a research report on Thursday.
“GBTC investors who had been buying a GBTC fund over the past year at a significant discount to NAV to put into an eventual ETF conversion appear to have taken full profits after the ETF conversion by exiting the Bitcoin space entirely rather than switching to the Bitcoin space,” analysts led by Nikolaos Panigirzoglou wrote. Cheapest Spot Bitcoin ETFs.”
Before it was listed in an exchange-traded fund (ETF) from a trust, GBTC was one of the only ways for U.S. stock traders to get exposure to Bitcoin price movements without having to buy the actual cryptocurrency. This made it the largest regulated Bitcoin fund in the world by AUM.
He had the bank previously estimated Up to $3 billion was invested in GBTC in the secondary market during 2023 to exploit the fund’s discount on net asset value. If this estimate is correct, and given $1.5 billion has already exited, there could be an additional $1.5 billion to exit the space via profit taking on GBTC, which will put further pressure on Bitcoin prices in the coming weeks.
These outflows are also pressuring GBTC to lower its fees, the report said, adding that “GBTC’s 1.5% fee still looks very high compared to other spot Bitcoin ETFs that risk more outflows.”
“More capital, perhaps an additional $5 billion to $10 billion, could exit GBTC if it loses its liquidity advantage,” the bank warned. As of Friday, GBTC is the most expensive ETF among its peers, with some charging zero fees for the first six months or until a certain assets under management (AUM) target is reached.
JPMorgan says other spot bitcoin ETFs, excluding GBTC, attracted $3 billion in inflows in just four days, and this is similar to inflows seen during previous bitcoin product launches.
Most of these $3 billion inflows reflect rotation from existing Bitcoin instruments such as futures-based ETFs, the report added.