Grayscale selling pressure ‘largely behind us,’ spotlight on Newborn Nine: JP Morgan Grayscale selling pressure ‘largely behind us,’ spotlight on Newborn Nine: JP Morgan
The banking giant analysts also speculated that the newly launched ETFs will play a prominent role in BTC price discovery.
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Updated: Jan. 26, 2024 at 12:51 pm UTC
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Analysts from banking giant JPMorgan believe that the profit-taking from the Grayscale Bitcoin Trust (GBTC) may have concluded, potentially alleviating the downward pressure on Bitcoin prices.
The analysts explained that they had estimated that GBTC could see as much as $3 billion in outflows from investors previously exposed to its discount. But with the flow now reaching as much as $4.3 billion since the ETF conversion, they believe that the “GBTC profit taking has largely happened already” and that “most of the downward pressure on Bitcoin from that channel should be largely behind us.”
This view is similar to that shared by Alistair Milne, the chief investment officer of Altana digital currency fund, who stated that the “GBTC selling should now be market neutral.”
Over the past weeks, BTC’s price has fallen by around 20% since the Securities and Exchange Commission (SEC) approved the launch of several spot Bitcoin ETFs in the U.S.
Observers have attributed this decline to the outflows from Grayscale’s fund, noting that it mainly had traded at a discount to its net asset value during the past two years. So, the ETF approval gave investors profit-taking opportunities on their previous GBTC investments.
BlackRock and Fidelity ETFs emerge as competitors.
JPMorgan analysts pointed out that BlackRock’s IBIT and Fidelity’s FBTC have emerged as major competitors for GBTC (the Newborn Nine.)
According to the firm, the ETFs from these traditional financial institutions have attracted nearly $2 billion in inflows since their launch, and their fees are much lower than that of GBTC, making them attractive options for investors.
GBTC has the highest fees among the newly launched ETFs, charging a 1.5% fee while competing ETFs like BlackRock’s IBIT and Fidelity’s FBTC charge just 0.25%.
As such, the analysts concluded that the outflows from GBTC to these ETFs could continue apace if the asset manager failed to lower its fees soon.
“The current $3 billion per month shift from GBTC to cheaper newly created spot Bitcoin ETFs could even accelerate if other spot ETFs reach critical mass to start competing with GBTC in terms of size and liquidity,” they wrote.
ETFs to induce significant change in the BTC market
The analysts also posited that these developments in the ETFs would result in a “significant change in the BTC market structure.”
JPMorgan analysts assert that the U.S. crackdown on foreign marketplaces in the previous year has opened avenues for “onshore spot exchanges and CME Bitcoin futures” to assume more prominent roles in determining top cryptocurrency prices.
With the launch of the ETFs, the market is expected to see more liquidity and depth; thereby, these newly launched investment vehicles will play a role in BTC’s price discovery process.
“The emergence of spot Bitcoin ETFs would make the Bitcoin price discovery process more rather than less efficient,” they concluded.
Mentioned in this article
Bitcoin 
BlackRock 
Grayscale Investments 
Fidelity Investments 
JPMorgan 
Grayscale Bitcoin Trust iShares Bitcoin Trust 
Fidelity Wise Origin Bitcoin Trust 
Alistair Milne Author 
Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
Editor Editor 
Liam 'Akiba' Wright
Also known as "Akiba," Liam is a reporter, editor and podcast producer at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.
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In this article
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
BlackRock
BlackRock, synonymous with global asset management, is an American multinational investment management corporation based in New York City.
Grayscale Investments
Established in 2013 by Digital Currency Group, Grayscale Investments is a trusted authority on digital currency investing and cryptocurrency asset management.
Fidelity Investments
Fidelity Investments Inc., commonly referred to as Fidelity, is a multinational financial services corporation based in Boston, Massachusetts.
JPMorgan
JPMorgan Chase & Co is a global leader in financial services, offering solutions to the world’s most important corporations, governments, and institutions in more than 100 countries.
The Grayscale Bitcoin Trust (GBTC) is a digital currency investment product that provides investors with access to Bitcoin through traditional investment channels.
The BlackRock Bitcoin ETF, known as the iShares Bitcoin Trust (IBIT), is an investment fund that provides regulated exposure to Bitcoin for investors.
The Fidelity Wise Origin Bitcoin Trust (FBTC) is a spot Bitcoin ETF that offers investors exposure to the price of Bitcoin.
Milne founded his first company aged 17, also working for AOL in 1996.