A JPMorgan Chase and Co JPM report sees Grayscale Bitcoin Trust GBTC investors who bought GBTC at a discount pre-ETF approval taking full profits, rather than shifting to cheaper spot Bitcoin ETFs.
JPMorgan Warns Of $1.5 Billion More Outflows
In a research note shared on Friday, the bank's analysts, led by Nikolaos Panigirtzoglou, stated that the value of Bitcoin BTC/USD has diminished by more than 15% following the recent introduction of spot exchange-traded funds (ETFs).
Since this launch, GBTC has experienced an outflow of approximately $1.5 billion.
The analysts observed that previously, GBTC served as one of the primary channels for U.S. stock traders to engage with Bitcoin's price movements without directly purchasing the cryptocurrency, making it the world's largest regulated Bitcoin fund in terms of assets under management (AUM).
JPMorgan had estimated that about $3 billion might have been invested in GBTC on the secondary market throughout 2023, capitalizing on the trust’s lower-than-net-asset-value (NAV) pricing.
Considering that half of this amount has already been withdrawn, the bank suggests that another $1.5 billion might soon be removed, potentially leading to further declines in Bitcoin prices in the upcoming weeks.
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Grayscale's Management Fee "Too High," Say Analysts
The report also indicated that these significant outflows pressure GBTC to reduce its fees.
It reads: “GBTC fee at 1.5% still looks too high compared to other spot bitcoin ETFs risking further outflows.”
The report further warns that “a lot more capital, perhaps an additional $5 billion-$10 billion, could exit GBTC if it loses its liquidity advantage.”
Currently, GBTC is the most costly among its peers, while some competitors offer zero fees initially or until reaching a specific AUM goal.
Contrasting GBTC's situation, JPMorgan highlighted that other spot Bitcoin ETFs, excluding GBTC, have attracted $3 billion in inflows in just four days.
This influx mirrors the trends observed during previous launches of Bitcoin-related products.
The bank’s report further noted that many of these inflows represent a shift from existing bitcoin investment vehicles, such as futures-based ETFs.
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