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Grayscale sell-offs cooling down will ease the ‘downward pressure’ on Bitcoin, JPMorgan says

Grayscale sell-offs cooling down will ease the ‘downward pressure’ on Bitcoin, JPMorgan says
JPMorgan expects outflows of around $2.7 billion from GBTC on approval of a spot Bitcoin ETF. Credit: Shutterstock / 24K-Production
  • Grayscale endured another day of heavy ETF outflows on Wednesday.
  • But JPMorgan analysts say the worst may be over.

Grayscale’s Bitcoin exchange-traded fund experienced another day of outflows on Wednesday, but the worst of the selling is likely over, according to JPMorgan analysts.

Investors pulled around $425 million from GBTC on Wednesday, slightly less than the $515 million of outflows on Tuesday.

It was also the lowest daily outflow figure since GBTC converted to a spot Bitcoin ETF earlier in January, following the US Securities and Exchange Commission’s approval of several such funds.

Most of the GBTC profit taking has run its course, JPMorgan analysts said in a report on Thursday.

Based on this “most of the downward pressure on Bitcoin,” from investors exiting GBTC positions should be over.

Bitcoin has fallen over 18% since its January $49,000 high, due in part to the Grayscale outflows as well as a bearish macroeconomic outlook.

Around $1.3 billion has “shifted from GBTC to cheaper newly created spot Bitcoin ETFs, which is equivalent to a monthly outflow pace of around $3 billion per month,” JPMorgan analyst said.

It likely this pace of outflows continues over the coming months if Grayscale is “too slow in lowering its fees,” the report said.

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BlackRock and Fidelity’s Bitcoin ETFs are the “two emerging competitors,” to Grayscale, according to JPMorgan’s report, mainly due to charging much lower fees — between 130 and 140 basis points lower than Grayscale’s 1.5% management fee.

Adam is a markets correspondent for DL News. Have a tip? Contact him at adam@dlnews.com