Financial giant JPMorgan (JPM) said in a research note on Thursday that Bitcoin BTC has lost $1.5 billion since the physical exchange-traded fund (ETF) was launched for the first time last week, leaving the Grayscale Bitcoin Trust GBTC. It said that the stock had fallen by more than 15%.
“Over the past year, GBTC investors who have been purchasing GBTC funds at deep discounts to NAV in preparation for eventual ETF conversion are exiting the Bitcoin space entirely rather than moving into the Bitcoin market. By doing so, it appears to be reaping the full benefit of converting the ETF to a “cheaper spot Bitcoin ETF,'' analysts led by Nikolaos Panigirtzoglou wrote.
Prior to its listing from the Trust to an ETF, GBTC was one of the only ways for U.S. stock traders to gain exposure to Bitcoin price movements without purchasing the actual cryptocurrency. This makes it the world's largest regulated Bitcoin fund in terms of total assets under management.
The bank had previously estimated Up to $3 billion was invested in GBTC in the secondary market during 2023 to take advantage of the trust's discount to NAV, it said. If this estimate is correct, an additional $1.5 billion could be exited through GBTC profit taking, given that $1.5 billion has already been exited, putting further pressure on Bitcoin prices in the coming weeks. That's going to happen.
The report states that these outflows are also putting pressure on GBTC to lower its fees, stating that “GBTC fees of 1.5% remain high compared to other spot Bitcoin ETFs, which are at risk of further outflows. It looks too much,” he added.
“If GBTC loses its liquidity advantage, more capital could be withdrawn, perhaps another $5-10 billion,” the bank warned. As of Friday, GBTC is the most expensive of the ETFs, some of which have zero fees for the first six months or until a certain assets under management (AUM) goal is reached.
Other spot Bitcoin ETFs, excluding GBTC, have attracted $3 billion in inflows in just four days, comparable to inflows seen during previous Bitcoin product launches, according to JPMorgan.
Most of this $3 billion inflow reflects rotation from existing Bitcoin vehicles such as futures-based ETFs, the report added.
