The Grayscale Bitcoin Trust (GBTC) is set to see a massive outflow of $2.7 billion after the conversion of its shares into a Bitcoin exchange-traded fund (ETF), according to JPMorgan.
The GBTC, which is the largest cryptocurrency trust in the world, is currently being traded over-the-counter (OTC) and is not directly redeemable, unlike ETFs. However, as the Securities and Exchange Commission (SEC) is likely to approve a Bitcoin ETF in the near future, many GBTC shareholders are expected to convert their shares into the new ETF, leading to a significant outflow from the trust.
JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a recent note to clients that “In the case of GBTC, it faces a structural-demand headwind over the coming months as the recent conversion of GBTC to an ETF will lead to substantial GBTC outflows over some months given the way that ETF transition is executed.”
The outflow from GBTC is expected to have a substantial impact on the overall cryptocurrency market, as it represents a significant amount of Bitcoin holdings. JPMorgan’s Panigirtzoglou further stated that “we estimate that the unwind of the GBTC discount alone will contribute to $2.7 billion of outflows from the trust.”
The conversion of GBTC into an ETF has been long-awaited by many investors, as it will make it easier for institutional investors to gain exposure to Bitcoin. ETFs are more liquid and easier to trade than OTC products such as the GBTC, and they also offer tax advantages for investors.
The prospect of a Bitcoin ETF has been a hot topic in the cryptocurrency space for years, and many industry experts believe that it will open the floodgates for institutional money to pour into the market. The approval of a Bitcoin ETF is also expected to bring more legitimacy to the cryptocurrency market and attract a broader range of investors.
The news of the expected outflow from GBTC comes just as the price of Bitcoin has started to rebound after a recent dip. The cryptocurrency has been hovering around the $60,000 mark in recent days, and many analysts believe that it could continue to climb higher in the near future.
As the cryptocurrency market continues to evolve, the approval of a Bitcoin ETF could be a game-changer for the industry. It will open up new ways for investors to gain exposure to Bitcoin and other digital assets and could significantly impact the way that cryptocurrencies are traded and valued.
Overall, the conversion of GBTC into an ETF and the subsequent outflow of $2.7 billion is likely to have a major impact on the cryptocurrency market. It could lead to increased liquidity and more institutional interest in Bitcoin, as well as potentially pushing the price of the digital asset higher in the coming months.