According to JPMorgan (JPM) in a research paper released on Wednesday, there is evidence that the Blackrock (BLK) and Fidelity spot bitcoin (BTC) exchange-traded funds (ETFs) currently have an advantage over Grayscale when it comes to specific liquidity indicators connected to market breadth.
According to the report, Grayscale’s GBTC fund is expected to lose out to newly created ETFs, specifically the Blackrock and Fidelity products, even though outflows from the fund decreased in the fourth week after approval by the U.S. Securities and Exchange Commission (SEC). This is because the fund is not expected to significantly reduce its fees.
Among spot bitcoin ETF issuers, Grayscale levies the most fees. As part of its transition to a spot bitcoin ETF, it reduced its 2% management fee to 1.5%, but it is still far more costly than competing products.
Analysts under Nikolaos Panigirtzoglou noted, “An additional reason beyond fees is that the Blackrock and Fidelity ETFs are already commanding an advantage vs GBTC in terms of two liquidity metrics.”
The first uses the Hui-Heubel ratio as the bank’s approximation of market breadth. The Blackrock and Fidelity ETFs’ values are around four times higher than GBTC’s, suggesting that they “exhibit significantly more market breadth than GBTC.”
Based on the “average absolute deviation” of ETF closing prices from net asset value (NAV), the second indicator is calculated, according to the research.
Last week, according to this metric, the “GBTC ETF’s deviations have remained high, implying lower liquidity,” while the “ETF price deviation from NAV of the Fidelity and Blackrock spot bitcoin ETFs approached that of the GLD Gold ETF, implying a significant improvement in liquidity,” the report continued.