APROVED BITCOIN ETF SPOT JUST CREATES SELLING PRESSURE⁉️
Bitcoin Spot ETF Market Impact
JPMorgan analyst Nikolaos Panigirtzoglou shared his predictions about the potential impact on bitcoin prices of the US Securities and Exchange Commission (SEC) approving bitcoin exchange-traded funds (ETFs) in a Linkedin post on Friday.
While emphasizing his confidence in the SEC's approval of a spot bitcoin ETF in the near future, he cautioned that client discussions center on potential capital outflows from the Grayscale Bitcoin Trust (GBTC) as it transitions into a bitcoin ETF.
“The argument is that a large number of GBTC shares have been purchased in the secondary market this year at a large discount to NAV in anticipation of their conversion to an ETF and these speculative investors will take advantage once GBTC is converted to an ETF and discounted to an ETF. NAV is arbitrated,” explains Panigirtzoglou. “We estimate about $2.7 billion could be generated from GBTC.” JPMorgan estimates:
In terms of market impact, if this $2.7 billion exits the bitcoin space completely, then the outflow will of course put huge pressure on the price of bitcoin.
“If most of this $2.7 billion is shifted to other bitcoin instruments such as the newly created spot bitcoin ETF after SEC approval, which is our best estimate, then the negative impact on the market will be smaller. "Nevertheless, the balance of risks to the bitcoin price is tilted to the downside in our opinion as some of this $2.7 billion is likely to exit the bitcoin space entirely," the analyst continued.
“Significantly more money than the above $2.7 billion could come out of GBTC if the fee (currently at 200bp) is not sharply reduced post ETF conversion towards our estimated balance fee range of around 50-80bp,” he warned.
