JPMorgan Analysts Warn GBTC Profit-Taking Imposing Increased Pressure on Bitcoin Price
JPMorgan analysts are warning that the quest for profits by GBTC investors could exert increased downward pressure on the Bitcoin price.
The JPMorgan analysts decry that the persuasion of GBTC investors to take profits will race to sell, thereby exerting downward pressure on the Bitcoin price. The analysts labeled the potential of spot Ethereum ETF approval by May as slim.
JPMorgan analysts consider the investors seeking to profit from the Grayscale Bitcoin Trust could sell off. The sale could trigger a further decline in the Bitcoin price, particularly in the subsequent weeks.
JPMorgan analysts indicated that speculative inventors were behind the $1.5 billion outflows from GBTC, which were driven by the desire to take profits. The move by the investors follows the green light granted by the US Securities and Exchange Commission (SEC) for the GBTC conversion into the spot Bitcoin exchange-traded fund (ETF).
JPMorgan Analysts Warn GBTC Outflow to Hit $3 Bllion
JPMorgan analysts believe that the previous projection of $3 billion is proving correct, considering that a $1.5 billion outflow was recorded. The analysts indicate that $1.5 billion will exit the Bitcoin space for speculative investors pursuing profits on GBTC.
JPMorgan lead analyst Nikolaos Panigirtzoglou indicated in a Thursday, January 18 statement that GBTC profit-taking investors are imposing pressure on Bitcoin prices in the subsequent weeks.
The analysts indicated that GBTC investors who, in the year 2023, bought the Grayscale Investments’ shares at a discount to the net asset value in readiness for ETF conversion could consider taking the profit. Such are exiting the Bitcoin space and not shifting to the cheaper spot Bitcoin ETFs.
The GBTC outflows exert huge pressure on the fund, prompting it to lower the fees. The analysts indicated that the 1.5% fee is exorbitant relative to the charges by rival spot Bitcoin ETFs.
The JPMorgan analysts project that GBTC risks suffering further outflows from institutional investors. The high fees could prompt institutional investors to consider other cheaper spot Bitcoin ETFs.
Panigirtzoglou illustrates that market depth and liquidity are influential factors. GBTC risks suffering outflows, particularly when rival spot Bitcoin ETFs realize the critical mass in sizes and liquidity. Such could trigger an outflow of $5B to 10 B when the GBTC suffers liquidity loss.
Slim Chance for Spot Ethereum ETF Approval by May
Panigirtzoglou indicated that JPMorgan hardly bets a 50% probability of the Gary Gensler-led SEC approving the spot Ethereum ETF as the initial deadline edges closer.
JPMorgan analysts echoed previous views that, though sympathetic to the arguments, advanced to indicate potential approval. The analysts admitted skepticism that the SEC will reclassify Ethereum as a commodity in time to approve the spot Ethereum ETF by May.
The analysts consider that Ethereum’s transition from proof-of-work (POW) to proof-of-stake (POS) adversely affected its decentralization. Today, Ethereum mirrors other cryptos labeled securities by the regulator.
The analysts illustrated that the multiplicity of lawsuits leveled by the SEC against various crypto exchanges features platforms offering staking services. The scope extends to proof-of-stake blockchains such as Ethereum.
The lawsuits pose challenges that make it challenging for the SEC to grant a green light to the spot Ethereum ETF soon.
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