Bitcoin Reclaims $41,000 After JPM States GBTC Sell-Off “Behind Us”
Grayscale’s recently converted Bitcoin Trust (GBTC) witnessed $4.3 billion in outflows since its conversion to an exchange-traded fund (ETF) earlier this month. JPMorgan analysts described the outflows as part of investors’ profit-taking efforts on previous GBTC investments and one of the primary catalysts behind the cryptocurrency’s recent dip. But, the bank thinks the bulk of profit-taking is over, propelling BTC to $41,000 on Friday.
Bitcoin ETFs Saw $158M in Single-Day Outflows on Jan. 24
JPMorgan analysts believe that most profit-taking from the Grayscale Bitcoin Trust (GBTC) is likely over, which could reduce the downward pressure on Bitcoin’s price. BTC jumped above the $41,000 threshold on Friday.
The bank’s remarks come amid a record high in daily net outflows from US spot Bitcoin ETFs after their ninth day of trading.
Since early 2021, the Grayscale fund has been trading at a discount to its net asset value. The $4.3 billion outflows from the fund since its conversion to an ETF on January 11 are attributed to investors cashing in on their earlier GBTC investments.
“GBTC profit taking has largely happened already.”– said JPMorgan’s market strategy managing director Nikolaos Panigirtzoglou in a Jan. 25 market report.
“This would imply that most of the downward pressure on Bitcoin from that channel should be largely behind us.”
This sell-off is a key factor behind Bitcoin’s recent price drop of nearly 20%, falling below $40,000 following the launch of several spot Bitcoin ETFs in the US. On January 24, JPMorgan’s analysis coincided with a record single-day net outflow of $158 million from the ten approved spot Bitcoin ETFs, as reported by BitMEX research on Thursday.
Specifically, Grayscale’s ETF experienced outflows of $429 million on January 24, and according to BitMEX data, these outflows decreased to $394 million, marking its second-lowest outflow day.
Initially, the GBTC was a trust that allowed investors to buy shares representing Bitcoin in a traditional market setting, often trading at a premium or discount to BTC’s actual value. This month, Grayscale received approval from the SEC to convert its fund to a spot Bitcoin ETF, marking the end of a long-standing legal battle.
Bitcoin ETFs Are Live, Investors Await 4th Halving
After a stellar performance in 2023, Bitcoin prices faced a setback this year, sliding almost 7% since January 1.
Institutional endorsements and the recent rise in market prices positively impact the crypto market; some analysts believe that BTC’s price gains stemming from the ETF hype were already priced in before their launch.
The crypto market’s forward-looking nature suggests that traders who bought into rumors may be poised to sell regardless of the actual news. However, JPMorgan believes much of that selling pressure is gone.
In addition, BTC is set to undergo its fourth halving this year, an event that has historically led to notable price surges in the flagship cryptocurrency.
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