Bitcoin Pressure Eases As Profit-Taking Party Winds Down, JPMorgan Examines GBTC

The Grayscale Bitcoin Trust GBTC has likely experienced the majority of its profit-taking, suggesting a potential reduction in downward pressure on Bitcoin BTC/USD prices.

What Happened: JPMorgan JPM analysts, led by market strategy managing director Nikolaos Panigirtzoglou, noted in a Jan. 25 market report that “GBTC profit taking has largely happened already.

"This would imply that most of the downward pressure on Bitcoin from that channel should be largely behind us," the report stated.

This analysis comes amidst record-high daily net outflows from U.S. spot Bitcoin exchange-traded funds (ETFs) on their ninth day of trading.

Since early 2021, Grayscale’s fund has been trading at a discount to its net asset value.

The analysts attribute the fund’s $4.3 billion outflows since its conversion to an ETF on Jan. 11 to profit-taking from previous GBTC investments.

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Why It Matters: This activity is believed to have contributed to Bitcoin’s nearly 20% price drop, now trading under $40,000, following the launch of multiple U.S. Bitcoin ETFs.

The analysis by JPMorgan comes in the wake of ten approved spot Bitcoin ETFs experiencing a net outflow of $158 million on Jan. 24, marking the largest net outflow day since their launch, according to BitMEX research data shared on social media platform X on Jan. 25.

Here is the chart for day 9, with all data out

Day 9 was pretty weak for Blackrock, with +$66m

Fidelity performed well: +$126m pic.twitter.com/2VzTpZWOKx

— BitMEX Research (@BitMEXResearch) January 25, 2024

JPMorgan analysts also highlighted BlackRock Inc. BLK and Fidelity’s spot Bitcoin ETFs as emerging competitors to GBTC. These funds have gathered assets under management of $1.9 billion and $1.8 billion, respectively.

On Jan. 24, BlackRock’s ETF saw its lowest inflows since its inception, adding only $66.2 million, while its Bitcoin holdings increased by 1,663 BTC to nearly 45,700 BTC.

Fidelity’s ETF added 3,170 BTC on the same day, bringing its total to 41,319 BTC.

Additional insights provided by Arkham reveal that Grayscale's daily BTC flows involve large amounts sent to Coinbase Prime deposits around the U.S. market open, likely representing GBTC redemptions.

However, it's important to note that these outflows are typically split between Coinbase Prime and new GBTC custody addresses, indicating that not all moved BTC are being redeemed.

Furthermore, these outflows seem to be settlements of trading activity from previous days. For instance, about 75% of BTC outflows were directed to Coinbase Prime on a recent trading day.

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