Bitcoin Exchange Traded Funds (ETFs) have witnessed a substantial injection of capital, prompting a rise in Bitcoin’s price towards a $50,000 benchmark. Despite such optimistic projections, they may not be fully realistic. As part of its financial analysis, JPMorgan has recently provided its perspective on the cryptocurrency sector.
Big Banks Venture into Crypto
JPMorgan, a global financial powerhouse, despite its CEO’s reservations about cryptocurrencies, is engaging in the crypto space. The bank has taken particular interest in how BlackRock and Fidelity Investments’ ETFs have performed relative to the Grayscale Bitcoin Trust (GBTC), observing superior liquidity in the former’s offerings.
The iShares Bitcoin Trust (IBIT) by BlackRock and Fidelity Wise Origin Bitcoin Fund (FBTC) ETFs have been leading the pack with notable performance improvements for several weeks. Their asset reserves have been expanding swiftly, attracting investors who prefer the stability of ETFs over direct cryptocurrency holdings.
Liquidity Metrics Favor New ETFs
JPMorgan strategists, utilizing the Hui-Heubel liquidity ratio, have identified that the two new ETFs surpass GBTC when it comes to market price reactions to trade volumes, indicating a more robust market presence.
Recent data has shown that for the first time since inception, the trading volume of BlackRock’s IBIT exceeded that of GBTC. While Grayscale has historically led volumes, mainly due to intense selling, BlackRock’s ETF has posted $301 million in trading volume, outpacing GBTC’s $290.7 million.
Inflows into Spot Bitcoin ETFs have totaled $8 billion to date, but with GBTC’s outflows at $6 billion, the net increment stands at about $2 billion. There’s a notable shift in investor preference from GBTC to the ETFs offered by BlackRock and Fidelity. The BTC reserves for these two financial institutions have amassed $3.4 billion and $2.9 billion respectively in under a month.