JPMorgan, a leading financial institution, recently shared insights in a research report indicating that the selling pressure on Bitcoin (BTC) might be subsiding. This change is attributed mainly to reduced profit-taking activities in the Grayscale Bitcoin Trust (GBTC), a significant crypto investment vehicle.
Shift in Investor Behavior Following GBTC’s ETF Conversion
Previously, GBTC stood as one of the limited options for U.S. investors to gain Bitcoin exposure without directly owning the cryptocurrency. This investment product, now converted to an Exchange-Traded Fund (ETF), manages assets over $20 billion, making it the most substantial Bitcoin investment product. The report highlighted that Bitcoin’s value declined by over 20% within two weeks following the U.S. launch of spot Bitcoin ETFs. This decline is linked to investors who had bought GBTC at a discount opting to take profits.
JPMorgan’s Analysis of GBTC’s Impact on Bitcoin’s Market
JPMorgan had predicted a $3 billion outflow from GBTC due to investors capitalizing on the ‘discount to net asset value’ (NAV) trade. When investors withdraw profits from this trade, it results in capital exiting the crypto market, consequently exerting a downward pressure on Bitcoin prices. However, the bank’s analysts, including Nikolaos Panigirtzoglou, noted that about $4.3 billion has already been withdrawn from GBTC. They concluded that the phase of profit-taking from GBTC has mostly concluded, suggesting that this should alleviate some downward pressure on Bitcoin.
The Future Outlook and Other Factors Influencing Bitcoin’s Price
The analysis further mentioned that approximately $1.3 billion may have shifted from GBTC to newer, less expensive spot Bitcoin ETFs. This shift equates to a $3 billion monthly outflow, which might persist if Grayscale does not reduce its fees. The growth of other spot ETFs could also accelerate this trend. Additionally, FTX’s bankruptcy estate reportedly sold around $1 billion worth of GBTC since its ETF conversion, adding to the selling pressure on Bitcoin.
