JPMorgan analysts, led by Nikolaos Panigirtzoglou, predict that Bitcoin prices may face selling pressure in the coming weeks if investors continue to take profits from the Grayscale Bitcoin Trust (GBTC). After GBTC’s transformation into a spot Bitcoin ETF, over $1.5 billion has already been withdrawn, aligning with JPMorgan’s earlier forecast of up to $3 billion in outflows.
Investors who had purchased GBTC shares at a significant arbitrage advantage over the last year are now realizing full profits by exiting the Bitcoin space entirely instead of transitioning to cheaper spot Bitcoin ETF products post-conversion.
The outflows from GBTC are also putting pressure on the fund to reduce its fees. Analysts highlight that the current 1.5% transaction fee is considerably high compared to other spot Bitcoin ETFs. While fees are a critical factor for some institutional investors deciding whether to switch to cheaper spot Bitcoin ETF products, GBTC faces additional risks of further outflows.
Liquidity and market depth are significant considerations, and if other spot Bitcoin ETF products achieve critical mass in size and liquidity, GBTC could face risks in these areas as well.
Regarding Ethereum ETFs, JPMorgan analysts reiterated their skepticism about the SEC classifying Ethereum as a commodity in the short term, such as by May, and the ongoing legal cases against crypto exchanges offering staking services for proof-of-stake networks, including Ethereum, make an ETF approval unlikely until these cases are resolved.