JPMorgan Analyst Foresees Bitcoin Market Pressure
Global investment bank JPMorgan has issued a warning about potential further outflows from Grayscale’s bitcoin fund, GBTC, which could exert additional pressure on Bitcoin prices in the coming weeks. JPMorgan analyst Nikolaos Panigirtzoglou shared insights on Linkedin regarding the impact of recent spot bitcoin ETF launches and the corresponding outflows from Grayscale’s fund. Notably, the conversion of GBTC into a spot bitcoin ETF, following its approval by the U.S. Securities and Exchange Commission (SEC) along with 10 other funds on January 10, has been a significant factor in market dynamics.
The Impact of Spot Bitcoin ETF Launches and GBTC Outflows
Since the launch of spot bitcoin ETFs, the bitcoin price has experienced a decline of over 10%, which Panigirtzoglou attributes to profit-taking dynamics following the ETF approvals. The price of Bitcoin, which had risen past $47,000 in anticipation of the ETF approvals, dropped post-approval, trading at $41,697 at the time of the analyst’s writing. A notable $1.5 billion outflow from Grayscale’s GBTC fund has been particularly impactful, indicating that investors who had previously bought GBTC at a discount are now exiting the bitcoin space entirely post-ETF conversion rather than transitioning to the newly available, cheaper spot bitcoin ETFs.
Further Outflows and Inflows in the Bitcoin ETF Space
Panigirtzoglou estimates that up to $3 billion had been invested into GBTC in the secondary market during 2023 to capitalize on the discount to NAV. With $1.5 billion already exited, there could still be an additional $1.5 billion to exit the Bitcoin space, potentially placing further downward pressure on Bitcoin prices. Since January 12, Grayscale’s bitcoin ETF has seen an outflow of 50,106.59 BTC, valued at over $2 billion.
The analyst also examined the inflows into other spot bitcoin ETFs launched on January 11, including Blackrock’s Ishares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC). These ETFs received a significant inflow of $3 billion in just four days, reflecting a rotation from existing bitcoin vehicles and retail investors moving from digital wallets held with exchanges/retail brokers to the new, more cost-effective spot bitcoin ETFs. This shift mirrors the patterns seen during previous bitcoin product launches, such as the CME bitcoin futures and futures-based bitcoin ETFs.