in an investigation note On Thursday, JP Morgan indicated a positive outlook for bitcoin, suggesting that the digital currency has “limited downside” from its current position. The financial giant's analysis focuses on the dynamics involving the Grayscale bitcoin Trust (GBTC) and the recently launched bitcoin spot ETFs in the United States.
JP Morgan foresees the end of selling pressure
The report acknowledges the recent 20% correction in the price of btc over the past two weeks, largely attributing it to profit-taking on previous GBTC investments. Analysts at JP Morgan note: “GBTC's 'discount to trade NAV' profit-taking has likely been a major driver behind bitcoin's correction; So far, $4.3 billion has come out of GBTC since its conversion to an ETF.”
They emphasize that this profit taking is primarily responsible for the downward pressure on the price of btc as funds exit the crypto space. However, the analysts are optimistic, stating: “We believe the majority of this $4.3 billion GBTC outflow reflects profit-taking rather than a shift toward cheaper spot bitcoin ETFs.”
JP Morgan further estimates that most of the profit-taking from GBTC's “discount to NAV trade,” approximately $3 billion, has already occurred, suggesting that the primary force driving the price lower is largely measure exhausted.
The report also sheds light on the changing landscape in the bitcoin ETF market. He notes that while GBTC has been dominant, the emergence of cheaper and more competitive spot ETFs, particularly from Blackrock and Fidelity, is worth noting. These new entrants have attracted significant inflows, totaling $1.9 billion and $1.8 billion respectively, and are challenging GBTC with substantially lower fees.
In this context, the analysts warn that “the current $3 billion per month shift from GBTC to cheaper, newly created bitcoin spot ETFs could even accelerate if other spot ETFs reach critical mass to start competing with GBTC in terms of size and liquidity.”
Notably, this competition is not only leading to a reallocation of funds within the ETF space, but is also drawing capital out of digital wallets held by retail investors, signaling a broader shift in investor preferences. , says JP Morgan.
bitcoin spot ETFs improve market structure
Furthermore, analysts highlight the structural impact of btc spot ETFs on the market. They argue that the introduction of these ETFs is transforming the pricing process, making it more similar to that of traditional financial systems, especially stocks, where ETFs play an important role. They posit: “The emergence of bitcoin spot ETFs is likely to induce a significant change in the structure of the bitcoin market.”
The report also discusses GBTC's strategic move to introduce a covered call ETF, emphasizing its potential to improve market depth and liquidity. “GBTC's plan to introduce a covered ETF is another step towards increasing the market depth and liquidity of its ETF,” the analysts say.
This approach, commonly employed in equity markets, could offer investors exposure with reduced risk, potentially increasing both the appeal of GBTC and the broader bitcoin derivatives market.
In essence, the JP Morgan report paints a picture of a btc market at a crossroads, influenced by a complex interplay of profit-taking, investor reallocation, and strategic product introduction. Despite recent slowdowns, the analysis suggests “limited downside,” supported by the conclusion that most of the profit-taking pressure may already be behind us.
At the time of this publication, btc price was once again trying to break through the crucial resistance level of $40,300.
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