[2024-01-21] JPMorgan Warns of Incoming Bitcoin Selloff ...

[chmod755]

JPMorgan Warns of Incoming Bitcoin Selloff With Anticipated $3 Billion Grayscale Outflow

Global investment bank JPMorgan has warned of additional outflow from Grayscale’s bitcoin fund, cautioning that it will put “further pressure on bitcoin prices over the coming weeks.” The bank’s analyst also explained that the $3 billion inflow into new spot bitcoin exchange-traded funds (ETFs) “reflects a rotation from existing bitcoin vehicles” or “from retail investors shifting from digital wallets held with exchanges/retail brokers to cheaper spot bitcoin ETFs.”

JPMorgan Warns of Looming Bitcoin Selloff

JPMorgan analyst Nikolaos Panigirtzoglou shared his bitcoin’s price outlook on Linkedin Friday, specifically the impact of spot bitcoin exchange-traded fund (ETF) launches and outflows from Grayscale’s bitcoin fund. Grayscale converted its bitcoin trust (GBTC) into a spot bitcoin ETF after the U.S. Securities and Exchange Commission (SEC) approved it along with 10 other funds on Jan. 10.

“The bitcoin price declined by more than 10% since the launch of spot bitcoin ETFs last week,” the JPMorgan analyst described. “It appears that profit taking, i.e. buy the rumor/sell the fact dynamics, took place in recent days as we had previously feared. The price of BTC rose past $47K in anticipation of the spot bitcoin ETF approval but dropped after the approval. At the time of writing, the cryptocurrency is trading at $41,697.

“The $1.5bn outflow from the Grayscale’s GBTC fund in particular has acted as a drag. It looks like GBTC investors who over the past year had been buying the GBTC fund at a significant discount to NAV to position for its eventual ETF conversion, have been taking full profit post ETF conversion by exiting the bitcoin space entirely rather than shifting to cheaper spot bitcoin ETFs,” Panigirtzoglou detailed.

Noting that he has previously estimated that up to $3 billion had been invested into GBTC in the secondary market during 2023 to take advantage of the discount to NAV, the JPMorgan analyst explained:

If the previous $3bn estimate proves correct and given $1.5bn has exited already then there could be an additional $1.5bn still to exit the bitcoin space via profit taking on GBTC thus putting further pressure on bitcoin prices over the coming weeks.

Cumulatively, Grayscale’s bitcoin ETF has seen an outflow of 50,106.59 BTC since Jan. 12, valued at over $2 billion.

Panigirtzoglou also shared his analysis of the other spot bitcoin ETFs that launched on Jan. 11, including Blackrock’s Ishares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC).

“Outside GBTC, the other spot bitcoin ETFs got a decent $3bn of inflow in only four days: Thursday 11th, Friday 12th, Tuesday 16th, and Wednesday 17th. This is comparable to the inflows seen during previous bitcoin product launches such as the launch of CME bitcoin futures or the launch of futures-based bitcoin ETFs,” the JPMorgan analyst noted, adding:

As expected most of this $3bn of inflow reflects a rotation from existing bitcoin vehicles such as futures-based bitcoin ETFs which show outflows of close to $300mn since last Thursday or from retail investors shifting from digital wallets held with exchanges/retail brokers to cheaper spot bitcoin ETFs.

Source: https://news.bitcoin.com/jpmorgan-warns-of-incoming-bitcoin-selloff-with-anticipated-3-billion-grayscale-outflow/

[Oshosondy]

I do not care about what analysts are saying. What that is very important to me is to use the right approach to invest in bitcoin and strong cryptocurrencies of my choice. Although I am also expecting the price of bitcoin and other cryptocurrencies to decrease by this time. The bitcoin spot ETF adrenaline rush that made the market bullish is over and it is not halving time yet.

But even if I do not make analyses and not predicting this, I think I still have a better the approach which is DCA. I have my investment capital now divided into two fifth and three fifth. I am using the two fifth to invest while expecting the market to dump so that if there is a dump, I will use the remaining three fifth to invest.

If there is no dump and halving is over, I will invest all at that time irrespective of how the market is.

[Alphakilo]

“The $1.5bn outflow from the Grayscale’s GBTC fund in particular has acted as a drag. It looks like GBTC investors who over the past year had been buying the GBTC fund at a significant discount to NAV to position for its eventual ETF conversion, have been taking full profit post ETF conversion by exiting the bitcoin space entirely rather than shifting to cheaper spot bitcoin ETFs,” Panigirtzoglou detailed.

Although I do not understand most of what was written, the part that seem very confusing to me is this particular quoted paragraph. If I am correct is the paragraph saying that the GBTC investors are withdrawing their funds and profits and are not intending to invest them in either bitcoin of the spot bitcoin ETFs? I would like some clarification from anyone who understands it.

While on the other hand, my resolve is to stay focused on my investment and accumulating bitcoin. Whatever happens in the spot bitcoin ETF space is less of my concern. Buy the real thing. 

[cr1776]

“The $1.5bn outflow from the Grayscale’s GBTC fund in particular has acted as a drag. It looks like GBTC investors who over the past year had been buying the GBTC fund at a significant discount to NAV to position for its eventual ETF conversion, have been taking full profit post ETF conversion by exiting the bitcoin space entirely rather than shifting to cheaper spot bitcoin ETFs,” Panigirtzoglou detailed.

Although I do not understand most of what was written, the part that seem very confusing to me is this particular quoted paragraph. If I am correct is the paragraph saying that the GBTC investors are withdrawing their funds and profits and are not intending to invest them in either bitcoin of the spot bitcoin ETFs? I would like some clarification from anyone who understands it.

While on the other hand, my resolve is to stay focused on my investment and accumulating bitcoin. Whatever happens in the spot bitcoin ETF space is less of my concern. Buy the real thing.  

People were buying GBTC because it was selling at a discount.  E.g. you could buy $100 worth of bitcoin for $80.  Now that it converted to an ETF, the discount to NAV (net asset value) vanished so they can sell the $100 worth of bitcoin for $100. They made their profits and got out.  Many of these people were in there just to capture the difference between the cost and the NAV in anticipation of the ETF conversion, not because they wanted to be in bitcoin.

There are certainly a large number of investors who bought GBTC because they wanted bitcoin, there was some percentage over the last few months who bought it merely to capture the profit if it converted.

Does that make sense?

This is obviously a short term thing:  once it converted, the people trying to capture the spread, they sold.  Most people in GBTC weren't there for that reason.  So this will abate eventually once the short term speculators are out.  

The halving will be a catalyst going forward as new supply drops by half, with the easy availability of ETFs any move up will only attract more money now that you can do it easily without the need for opening an account somewhere, wiring money in etc.

[chmod755]

ETF investors are not interested in crypto, only in profits.

If they think the time to profit is over for Bitcoin and crypto, they will sell Bitcoin and invest in something else.

[cr1776]

ETF investors are not interested in crypto, only in profits.

If they think the time to profit is over for Bitcoin and crypto, they will sell Bitcoin and invest in something else.

Maybe.  I suspect some are interested in inflation hedges etc, similar to the people invested in gold ETFs.  Yes, it isn't as direct as holding your own keys, but I think there is some interest.  I don't know what the percentage divisions are, but you are right, there are plenty who are interested in profits above anything else.

[blckhawk]

ETF investors are not interested in crypto, only in profits.

If they think the time to profit is over for Bitcoin and crypto, they will sell Bitcoin and invest in something else.

They're still invested in bitcoin so I'm not worried and even if this is a big thing that will make waves on the market that will affect the price in a negative way then that means that we all have the opportunity to be able to buy bitcoin at a much lower price and I think that either way the market goes, it's a win for me and JPMorgan can just calm down and go back to their banking business because they're not really needed by the crypto people to remind them of what the Bloomberg could report on.