JPMorgan: Flow Of Funds Out Of GBTC Can Reduce Bitcoin Prices

JPMorgan analysts say the price of bitcoin will plummet because there is a flow of funds out of Greyscale. (Photo; Doc. BitcoinWisdom)

JAKARTA - JPMorgan's global investment bank warned investors about the flow of funds out of Grayscale's bitcoin fund (GBTC) which could potentially reduce bitcoin prices in the coming weeks. This happened after the launch of the Exchange Trade Funds (ETF) Bitcoin spot approved by US regulators.

JPMorgan analyst Nikolaos Panigirtzoglou shared his view of the price of bitcoin on Linkedin on Friday last week. He said that the price of bitcoin has fallen more than 10% since the launch of the spot's bitcoin ETF in the second week of January.

"It seems that profit taking, namely the dynamics of 'buy the rumour, sell the news', has occurred in the last few days as we were worried about before," he wrote.

According to Panigirtzoglou, the outflow of $1.5 billion (Rp23.4 trillion) from GBTC Grayscale funds has specifically had a bad impact. GBTC is a bitcoin investment product managed by Grayscale Investments, the world's largest crypto asset management company.

GBTC has just converted into an ETF bitcoin spot after the US Securities and Exchange Commission (SEC) approved it along with 10 other funds on January 10.

"It appears that GBTC investors who over the past year have bought GBTC funds with significant discounts on net asset value (NAV) to get ready to convert to ETF, have taken full advantage after the ETF conversion by fully exiting bitcoin space rather than switching to cheaper spot bitcoin ETFs," explains Panigirtzoglou.

He added that previously he estimated that around $3 billion (Rp46.9 trillion) had been invested in GBTC in the secondary market during 2023 to take advantage of discounts on NAVs.

"If the previous estimate of $3 billion is proven true and with $1.5 billion already out, then there could be an additional $1.5 billion that still has to get out of the bitcoin space through profit making on GBTC, thus causing further pressure on the price of bitcoin in the coming weeks," he said.

In total, Grayscale's ETF bitcoin has flowed out of 50,106.59 BTC since January 12, with a value of more than $2 billion (Rp 31.3 trillion).

Panigirtzoglou also shared his views on other bitcoin spot ETFs launched on January 11, including Blackrock's Ishares Bitcoin Trust (IBIT) and Fidelity's Wise Origin Bitcoin Fund (FBTC).