Grayscale investors could face further downward pressure on the Bitcoin price next week. Bitcoin BTC
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The Trust continues to make profits, according to JPMorgan.
GBTC converted to a spot Bitcoin ETF last week and has already seen over $1.5 billion in outflows. Last week, JPMorgan estimated that GBTC outflows could amount to up to $3 billion as speculative investors are likely to profit.
“If the previous $3 billion estimate was accurate and $1.5 billion has already exited, there could be an additional $1.5 billion left to exit the Bitcoin space through profit-taking on GBTC, which could lead to Bitcoin volatility in the coming weeks. This could put additional pressure on prices,” JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a note on Thursday.
GBTC investors, who had purchased the fund’s shares at a significant discount to their net asset value over the past year for the final ETF conversion, “exited the Bitcoin space entirely instead of moving into the Bitcoin space after the ETF conversion, taking full profits.” “A cheaper spot Bitcoin ETF,” analysts said.
Analysts said the GBTC outflows are putting increasing pressure on the fund to lower fees, and reiterated their view that the current 1.5% fee is “too high” compared to other spot Bitcoin ETFs.
Analysts noted that GBTC “risks additional outflows,” even if fees aren’t the only reason some institutional investors will consider when deciding whether to switch to a cheaper spot Bitcoin ETF.
“Liquidity and market depth are important, but there are risks to GBTC even as other spot Bitcoin ETFs reach critical mass in terms of size and liquidity,” they added. An additional $5 billion to $10 billion is possible, he added. Exit GBTC if it loses its liquidity advantage.
Approval of spot Ethereum ETF limited until May
Last week, Panigirtzoglou told The Block that JPMorgan does not see a greater than 50% chance of approving an Ethereum ETF by May. This is the first deadline for the Securities and Exchange Commission to decide on pending applications for those funds.
JPMorgan analysts reiterated this view in a report today, saying they were “sympathetic” to claims pointing to potential approval but were skeptical that the SEC would classify Ethereum as a commodity starting in May.
“Anyway, with Ethereum transitioning from proof-of-work to proof-of-stake, and the negative impact that transition has had on Ethereum decentralization, Ethereum appears to be more similar to other cryptocurrencies other than Bitcoin that the SEC considers a security. ” analysts said.
Moreover, lawsuits filed by the SEC against cryptocurrency exchanges that offer staking services for proof-of-stake blockchains, including Ethereum, make approval of an Ethereum ETF more difficult “at least until the lawsuit is resolved,” analysts concluded.
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