GBTC Profit Taking Is Causing Bitcoin Price To Crash, Says JPMorgan

Key Points:

• JPMorgan warns of a potential Bitcoin price decline as GBTC profit taking.
• Analysts flag GBTC’s 1.5% fee as “too high,” triggering ongoing outflows and pressure on Bitcoin prices.

According to The Block, JPMorgan analysts have expressed concerns that the price of Bitcoin may experience additional downward pressure in the coming weeks due to GBTC profit taking investors.

Read more: Grayscale Spot ETF: Basic Knowledge and Positive Future Outlook

Bitcoin Price Pressures: GBTC Profit Taking and Outflows Risks

GBTC recently transitioned into a spot Bitcoin ETF, resulting in over $1.5 billion worth of outflows. JPMorgan had previously estimated up to $3 billion in outflows, anticipating speculative investors to capitalize on profits.

The analysts, led by Nikolaos Panigirtzoglou, stated that if the initial $3 billion estimate holds true, an additional $1.5 billion could exit the Bitcoin space through GBTC profit taking, further impacting Bitcoin prices. The ongoing outflows are also prompting pressure on GBTC to reconsider its fees, with analysts deeming the current 1.5% fee “too high” compared to other spot Bitcoin ETFs.

Moreover, Grayscale Trust’s recent activity reveals a transfer of 41,478 BTC (valued at $1.784 billion) to Coinbase Prime over four consecutive trading days starting on January 12. BitMEX Research highlights a net outflow of $458 million on the fourth day, contributing to a cumulative net outflow of $1.62 billion from GBTC. In contrast, spot Bitcoin ETFs observed net inflows of $474 million on the fourth day and a total of $1.29 billion over the four days.

Analysts underscore the risk of “further outflows” for GBTC, emphasizing that fees are not the sole consideration for institutional investors contemplating a shift to more cost-effective spot Bitcoin ETFs. As GBTC faces these challenges, the market remains watchful for potential impacts on Bitcoin‘s overall stability in the weeks ahead.