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JPMorgan, one of the world’s largest investment banks, has warned in its latest report that the outflow of funds from Grayscale Bitcoin Trust (GBTC) could put pressure on the price of Bitcoin (BTC). Analysts also added that the outflows from GBTC could exceed $2.7 billion.
$2.7 Billion Could Leave the Bitcoin Market
JPMorgan’s latest research report highlights that a significant portion of GBTC shares are being purchased at a high negative premium compared to the net asset value (NAV) of the secondary market, in anticipation of the conversion of the trust into a spot exchange-traded fund (ETF) with approval from the U.S. Securities and Exchange Commission (SEC). The investment bank estimates that there has been a net inflow of $2.5 billion into GBTC since the beginning of this year, and this figure may have risen to $2.7 billion due to the rapid narrowing of the premium spread.
JPMorgan analysts led by Nikolaos Panigirtzoglou wrote, “If we assume that this buying activity is primarily speculative in anticipation of GBTC’s conversion into a spot ETF, it is likely that as these investors realize profits, the $2.7 billion will exit GBTC.”
The analysts added, “If the entire $2.7 billion were to exit the Bitcoin market, it would undoubtedly create significant downward pressure on the price of BTC. However, if most of this $2.7 billion were to flow into other Bitcoin investment vehicles such as newly created spot Bitcoin ETFs after SEC approval, which is our best guess, then there would be no negative market impact.”
Nevertheless, the bank said, “The risk balance for the price of Bitcoin is downward in our view, as it appears likely that a portion of this $2.7 billion could potentially exit the Bitcoin market entirely.”
Emphasis on “Outflows from GBTC Could Exceed $2.7 Billion”
Meanwhile, analysts expect that if the current transaction fees applied after the conversion of GBTC into a spot ETF are not effectively reduced, the outflows from the investment vehicle could be much higher than $2.7 billion.
JPMorgan analysts led by Nikolaos Panigirtzoglou have warned that if the transaction fees are not effectively reduced, the outflows from GBTC could exceed $2.7 billion.
