JPMorgan, one of the world’s largest investment banks, has released a report stating that outflows from the Grayscale Bitcoin Trust (GBTC) could exert pressure on the price of Bitcoin (BTC). Analysts also added that outflows from GBTC could surpass $2.7 billion.
The bank’s research report highlights that a significant portion of GBTC shares are being bought at a high negative premium compared to the net asset value (NAV) in the secondary market, with the expectation of the approval by the U.S. Securities and Exchange Commission (SEC) for the conversion of a spot exchange-traded fund (ETF). JPMorgan predicts that the net inflow to GBTC has reached $2.5 billion since the beginning of this year and could potentially rise to $2.7 billion due to the rapid narrowing of the premium spread.
Analysts suggest that if we assume this buying activity is mostly speculative based on the expectation of GBTC converting to a spot ETF, investors could withdraw $2.7 billion from GBTC as they realize profits.
Analysts also state that if the entire $2.7 billion were to exit the Bitcoin market, it would create significant downward pressure on the BTC price. However, they mentioned that if the majority of this money is transferred to other Bitcoin investment vehicles such as newly formed spot Bitcoin ETFs after SEC approval, it would not have a negative impact on the market.
The bank believes that the risk balance for the Bitcoin price is skewed to the downside, as a portion of this $2.7 billion could potentially exit the Bitcoin market entirely.
On the other hand, analysts expect that if the current transaction fees applied after the conversion of GBTC to a spot ETF are not effectively reduced, outflows from the investment vehicle could be much higher than $2.7 billion.