According to a study report released on Thursday by financial behemoth JPMorgan (JPM), $1.5 billion has been withdrawing from the Grayscale Bitcoin Trust (GBTC), causing Bitcoin BTC to fall by more than 15% since the spot exchange-traded funds (ETFs) were introduced last week.
Instead of switching to less expensive spot bitcoin ETFs, analysts under Nikolaos Panigirtzoglou concluded that “GBTC investors, who over the past year had been buying the GBTC fund at a significant discount to NAV to position for its eventual ETF conversion, have been taking full profit post-ETF conversion by exiting the bitcoin space entirely.”
GBTC was the only means for U.S. stock traders to be exposed to the price swings of bitcoin without having to buy the cryptocurrency itself, until it was uplisted to an ETF from a trust. As a result, by AUM, it became the biggest regulated bitcoin fund globally.
In order to take advantage of the trust’s discount to NAV, the bank had earlier projected that up to $3 billion had been invested in GBTC on the secondary market until 2023. In the event that this estimate is accurate and $1.5 billion has already left the market due to profit-taking on GBTC, an additional $1.5 billion could leave the market, substantially pressuring bitcoin prices in the upcoming weeks.
According to the article, GBTC is facing pressure to reduce its fees as a result of these outflows. It stated that the 1.5% fee for GBTC is still too expensive when compared to other spot bitcoin ETFs, which could lead to further outflows.
The bank issued a warning, saying that “a lot more capital, perhaps an additional $5 billion-$10 billion, could exit GBTC if it loses its liquidity advantage.” With some charging no fees for the first six months or until a specific assets under management (AUM) target is attained, GBTC is the most expensive ETF among equivalents as of Friday.
According to JPMorgan, in just four days, $3 billion was invested in other spot bitcoin ETFs, excluding GBTC, and this amount is similar to what was invested in earlier bitcoin product launches.
The research also stated that the majority of this $3 billion in inflows are the result of investors shifting away from current bitcoin vehicles like futures-based ETFs.