JPMorgan says GBTC outflows stemmed, bitcoin downside ‘should be largely behind us’

Analysts at the firm noted bitcoin open interest, ETF inflows are rising again

January 25, 2024 04:58 pm

JPMorgan CEO Jamie Dimon | lev radin/Shutterstock modified by Blockworks

JPMorgan analysts penned a market strategy note Thursday that profit-taking on Grayscale’s bitcoin ETF (GBTC) had likely concluded, thus “limiting any downside for bitcoin from here.”

The analysis from JPMorgan would amount to a reversal of fortunes for bitcoin and its largest spot ETF. It follows a Tuesday note from JPMorgan claiming that the ETF catalyst would “disappoint market participants.”

Newly-approved spot bitcoin ETFs logged their single largest day of outflows Wednesday. Investors cashed out on $429 million worth of GBTC, bringing the product’s total outflows to roughly $4.4 billion in nine days of trading.

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Bitcoin has spent much of the week trading below $40,000 after topping $49,000 in the immediate aftermath of the ETF approvals.

JPMorgan previously estimated $3 billion would depart GBTC as investors took profit on the ETF trading below the value of bitcoin, the note said. The FTX estate was reportedly among the investors selling their GBTC.

The group of analysts, led by Nikolaos Panigirtzoglou, think the GBTC sell-off has concluded and “most of the downward pressure on bitcoin from that channel should be largely behind us.”

The note estimates another $1.3 billion shifted from GBTC to other spot bitcoin ETFs with lower fees. The analysts argue the shift in funds from GBTC to competing ETFs will likely continue if Grayscale fails to lower its fee of 1.5%, which is much higher than the 0.25% charged by competing offerings from Blackrock and Fidelity.

The note’s appendix shows upticks in open interest and bitcoin fund flows on Tuesday. Bitcoin open interest is up a little under 1% in the past 24 hours, according to data from Coinglass.

Earlier this week, JPMorgan downgraded the stock of popular bitcoin ETF custodian Coinbase following underwhelming week one performance from the slew of spot ETFs.

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