Grayscale's GBTC Earnings Likely to Take Over and Ease Bitcoin (BTC) Selling Pressure: JPMorgan

Selling pressure on Bitcoin (BTC), the world's largest cryptocurrency, from profit-taking investors in the Grayscale Bitcoin Trust (GBTC) crypto investment vehicle may be largely over, JPMorgan (JPM) said in a research report on Thursday.

Noting that Bitcoin fell over 20% in the two weeks following the launch of spot Bitcoin exchange-traded funds (ETFs) in the US, the bank said there had been profit-taking on GBTC by investors , who would have bought the fund at a discount, was the main reason for the correction.

Prior to its conversion into an ETF, GBTC was one of the few ways for U.S. investors to gain exposure to Bitcoin without owning the underlying cryptocurrency. With over $20 billion in assets under management, it is still the largest Bitcoin investment product.

JPMorgan had previously estimated an outflow of around $3 billion from GBTC due to profit-taking from discount to net asset value (NAV) trading. These flows are significant because as investors take profits from these trades, the money leaves the crypto market and puts downward pressure on the Bitcoin price.

“Given that GBTC has already issued $4.3 billion, we conclude that GBTC profit-taking has largely already occurred,” analysts led by Nikolaos Panigirtzoglou wrote, adding: “This would mean “That most of the downward pressure on Bitcoin should come from this channel behind us.”

The bank estimates that about $1.3 billion of GBTC has flowed into newly created spot Bitcoin ETFs that are cheaper. This represents a monthly outflow of $3 billion. These outflows are likely to continue if Grayscale is too slow to reduce its fees and could even accelerate if other spot ETFs “reach the critical mass to compete with GBTC in terms of size and liquidity,” the added Add report.

Crypto exchange FTX's bankrupt estate has also dumped around $1 billion worth of GBTC since converting it into an ETF, putting additional selling pressure on the underlying digital asset, a CoinDesk report showed.

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