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The price of Bitcoin has collapsed back towards $40,000 per BTC despite BlackRock’s legendary CEO BLK revealing that a massive cryptocurrency plan was already in the works, and the launch of a Bitcoin spot trading fund (ETF) was just the “first step.”
Now, as the market braces for an Elon Musk bombshell, bitcoin and cryptocurrency traders are anxiously eyeing outflows from Grayscale’s Bitcoin Trust (GBTC), which was recently converted into a full-fledged spot Bitcoin ETF — with JPMorgan warning that it could still be snatched away. $1.5 billion from the fund. Fund in the coming weeks.
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“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 they reviewed Bloc.
Grayscale’s GBTC value has risen alongside growing expectations that it will be granted full Bitcoin ETF status by the US Securities and Exchange Commission (SEC) in recent months.
JPMorgan analysts said those who have bought GBTC over the past few years “are now taking full profits after converting the ETF by exiting the Bitcoin space entirely rather than switching to cheaper spot Bitcoin ETFs.”
“Liquidity and market depth are also important, but again there is risk for GBTC on this front as well if other spot bitcoin ETFs manage to reach critical mass in terms of size and liquidity,” the analysts wrote, finding that GBTC could see an additional $5 billion to… $10 billion in outflows if liquidity advantage is lost.
A fee war has erupted between issuers of Bitcoin ETFs, with the likes of BlackRock and Fidelity offering ultra-low fees to those who want to buy shares, fueling demand for Grayscale’s GBTC alternatives.
“At the time of the transfer, GBTC held approximately 620,000 BTC, which has now fallen to approximately 552,000 BTC,” Matteo Greco, a research analyst at investment firm Fineqia International, said in email comments.
“The strong outflow can mainly be attributed to two factors: First, GBTC clients were prevented from redeeming shares and could only sell them on the secondary market due to the structure of the product, before conversion. This forced many clients to hold their positions for years. Without an exit option Unless they are willing to sell at a deep discount on the secondary market. Second, the higher management fees charged by Grayscale (1.5%) compared to most competitors (0.2%/0.3%) have led some investors to withdraw their investments from Grayscale, either to take profits or to reinvest In the most cost-effective ETFs.
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However, despite the violent fluctuations hitting the price of Bitcoin and impacting the prices of other major cryptocurrencies such as Ethereum, XRP, and Solana, many in the cryptocurrency space remain optimistic.
“While the short-term impact (immediate approval of a Bitcoin ETF) is unclear and may cause volatility in the medium term, my personal view is that increased access for retail investors, and alignment from institutions to adopt and promote a new asset class,” Jason Lau said. “It’s definitely positive,” OKX’s chief innovation officer said in an email.
“I believe that widespread acceptance of Bitcoin will eventually drive more users to interact with Bitcoin itself and leverage the power of the decentralized, permissionless network.”
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