GBTC Could See $2.7 Billion Outflow Upon ETF Conversion, JPMorgan Analysts Say
JPMorgan analysts have reported that the Grayscale Bitcoin Trust (GBTC) could experience outflows of at least $2.7 billion if it is converted into a spot Bitcoin exchange-traded fund (ETF).
The report from JPMorgan suggests that traders have been buying GBTC shares at a discount, likely aiming to profit by cashing out the holdings if the trust converts to an ETF and the share price rises to match its Bitcoin assets.
After the calculation of the GBTC inflows since 2023, the analysts came to the conclusion that the Grayscale Bitcoin Trust to ETF conversion could result in outflows upwards of $2.7 billion as investors sell off shares.
The JPMorgan analysts team, led by Global Market Strategy Managing Director Nikolaos Panigirtzoglou, explained their methodology, stating, “To proxy the buying flow into [the Grayscale Bitcoin Trust] since the beginning of the year, we cumulate the daily signed dollar volume, i.e., the daily volume in thousands of shares times the price times the sign of the price change, positive if the price had increased over that day and negative if the price had decreased.”
“This methodology produces an estimate of around $2.5 billion for the net cumulative flow into [the Grayscale Bitcoin Trust] since the beginning of the year. This number increases to close to $2.7 billion if one also adds the covering of the short interest since the beginning of the year,” said the analysts.
In addition, the analysts’ estimated $2.7 billion is the bare minimum outflow, and it could be “significantly more” unless GBTC’s current fee of 200 basis points is lowered to around 50 basis points.
“Once the SEC approves spot bitcoin ETFs in the U.S., we envisage a more intense competition with the average fee for bitcoin ETFs
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