JPMorgan Observes Slowing Outflows from Grayscale's Bitcoin ETF

Analysts at JPMorgan, led by Kenneth Worthington, report a slowdown in outflows from Grayscale's bitcoin ETF (GBTC). On Friday, the spot bitcoin ETF witnessed approximately $15 million in net sales, marking a reversal from the recent four-day streak of redemptions. Although the outflows have decelerated, the analysts emphasize that the sales' magnitude "remains small."

Friday's Net Inflows Reverse Trend

While JPMorgan anticipated the slowdown in Grayscale's outflows, they note that BlackRock's bitcoin ETF sales have also decelerated. Bloomberg Intelligence analyst James Seyffart reveals that GBTC's outflows have surpassed $5 billion, with total gross flows of $5.8 billion for other bitcoin ETFs. Despite the recent hype, the group has experienced net inflows of $759 million in the 11 days since the ETFs launched.

Signs of Hype Abating

Worthington suggests, "As we've been seeing transaction volumes slowing this past week, we think we are perhaps seeing an indication of the hype around these ETFs abating and entering a perhaps more normalized flow environment." Seyffart concurs, highlighting the slowing volume as well.

Concerns About GBTC's High Fee

In a note last week, JPMorgan analysts, led by Nikolaos Panigirtzoglou, anticipated a slowdown in profit-taking from GBTC, limiting further downside for bitcoin. They highlighted GBTC's high fee of 1.5%, suggesting that investors might consider swapping Grayscale's fund for an ETF with a lower fee. In comparison, BlackRock's fund carries a fee of 0.25%.

VanEck's head of digital assets stated last week that the flows remained in line with expectations.

Summary:

JPMorgan analysts observe a slowing trend in outflows from Grayscale's bitcoin ETF, with Friday's net inflows reversing a four-day streak of redemptions. While BlackRock's bitcoin ETF sales also decelerate, concerns arise about GBTC's high fee of 1.5%, potentially prompting investors to explore lower-fee alternatives. The analysts anticipate the hype around bitcoin ETFs to normalize, signaling a more stabilized flow environment.