The analysts explained that they had estimated that GBTC could see as much as $3 billion in outflows from investors previously exposed to its discount. But with the flow now reaching as much as $4.3 billion since the ETF conversion, they believe that the “GBTC profit taking has largely happened already” and that “most of the downward pressure on Bitcoin from that channel should be largely behind us.”
This view is similar to that shared by Alistair Milne, the chief investment officer of Altana digital currency fund, who stated that the “GBTC selling should now be market neutral.”
Over the past weeks, BTC’s price has fallen by around 20% since the Securities and Exchange Commission (SEC) approved the launch of several spot Bitcoin ETFs in the U.S.
Observers have attributed this decline to the outflows from Grayscale’s fund, noting that it mainly had traded at a discount to its net asset value during the past two years. So, the ETF approval gave investors profit-taking opportunities on their previous GBTC investments.
BlackRock and Fidelity ETFs emerge as competitors.
According to the firm, the ETFs from these traditional financial institutions have attracted nearly $2 billion in inflows since their launch, and their fees are much lower than that of GBTC, making them attractive options for investors.
GBTC has the highest fees among the newly launched ETFs, charging a 1.5% fee while competing ETFs like BlackRock’s IBIT and Fidelity’s FBTC charge just 0.25%.
As such, the analysts concluded that the outflows from GBTC to these ETFs could continue apace if the asset manager failed to lower its fees soon.
“The current $3 billion per month shift from GBTC to cheaper newly created spot Bitcoin ETFs could even accelerate if other spot ETFs reach critical mass to start competing with GBTC in terms of size and liquidity,” they wrote.
ETFs to induce significant change in the BTC market
The analysts also posited that these developments in the ETFs would result in a “significant change in the BTC market structure.”
JPMorgan analysts assert that the U.S. crackdown on foreign marketplaces in the previous year has opened avenues for “onshore spot exchanges and CME Bitcoin futures” to assume more prominent roles in determining top cryptocurrency prices.
With the launch of the ETFs, the market is expected to see more liquidity and depth; thereby, these newly launched investment vehicles will play a role in BTC’s price discovery process.
“The emergence of spot Bitcoin ETFs would make the Bitcoin price discovery process more rather than less efficient,” they concluded.