According to JPMorgan, if investors in the Grayscale Bitcoin Trust continue to take profits, Bitcoin price could face selling pressure in the upcoming weeks. GBTC converted to a spot Bitcoin ETF product last week and has already seen over $1.5 billion in outflows. Last week, JPMorgan had predicted that there could be up to $3 billion in outflows from GBTC due to speculative investors taking profits.
JPMorgan Analysts Forecast GBTC Outcomes
Analysts led by Nikolaos Panigirtzoglou at JPMorgan revealed in a note published on January 18 that if their previous $3 billion outflow prediction holds true, with $1.5 billion already exited, further profit-taking from GBTC could exert more pressure on Bitcoin prices in the coming weeks.
The analysts noted that GBTC investors who had bought shares of the fund at a significant arbitrage advantage over its net asset value throughout the past year, aiming for the eventual ETF conversion, might completely exit the Bitcoin space instead of switching to cheaper spot Bitcoin ETF products, thus realizing full profits after the ETF conversion.
The analysts also mentioned that the outflows from GBTC are creating pressure to reduce the fund’s fees, reiterating that the current 1.5% transaction fee is considered very high compared to other spot Bitcoin ETFs. They pointed out that even though fees might not be the only factor for some institutional investors when deciding whether to switch to cheaper spot Bitcoin ETF products, GBTC faces an increased risk of further outflows:
“Liquidity and market depth are important, but if other spot Bitcoin ETF products achieve critical mass in size and liquidity, GBTC faces risk on this front as well.”
Ethereum and ETF Speculations
Last week, Panigirtzoglou stated that JPMorgan did not see more than a 50% chance of an Ethereum ETF approval by the Securities and Exchange Commission’s first decision deadline in May. In today’s report, JPMorgan analysts reiterated this view, expressing skepticism that the SEC would classify Ethereum as a commodity within such a short timeframe as May:
“Ethereum’s transition to a commodity class and the negative impact of this transition on Ethereum’s decentralization makes it resemble other cryptocurrencies that are considered securities by the SEC, outside of Bitcoin.”
Furthermore, ongoing lawsuits by the SEC against crypto exchanges offering staking services for proof-of-stake blockchain networks, including Ethereum, make the approval of an Ethereum ETF more challenging, at least until these legal issues are resolved.
