BlackRock and Fidelity’s Spot Bitcoin ETF outperforms Grayscale’s GBTC on two key liquidity metrics, according to a new report shared by JPMorgan. Decryption.
Outflows from Bitcoin spot ETFs, particularly GBTC, have slowed over the past two weeks, but analysts at JPMorgan say that absent a “significant fee reduction” for GBTC, Grayscale’s funds will continue to grow over time. We concluded that we are likely to lose even more money to the BlackRock and Fidelity ETFs over time.
JPMorgan analysts believe this is due to two key advantages of the Fidelity ETF and BlackRock ETF. The first is a proxy for market breadth based on the Hui-Heubel ratio. This is approximately 4 times lower for the BlackRock and Fidelity ETFs than for GBTC, suggesting that these ETFs represent a greater market spread.
In general, market breadth is a measure used to determine the direction of the overall market by comparing the number of companies whose stock prices are rising with the number of companies whose stock prices are falling. . This helps investors understand the extent of market fluctuations and whether those fluctuations are broadly supported by the performance of many companies or driven by a few companies.
When it comes to ETFs, understanding the breadth of the market gives analysts a benchmark for determining how well a fund tracks the market.
Hui-Heubel ratio for Grayscale, Fidelity, and BlackRock Spot Bitcoin ETFs.Source: Bloomberg/JP Morgan
The second is based on the average absolute deviation between each ETF’s closing price and net asset value (NAV). Analysts noted that over the past week, this indicator has shown that the deviation of the ETF price from the NAV of the BlackRock and Fidelity Bitcoin Spot ETFs has moved closer to the NAV of the GLD Gold ETF. . This, they suggest, “suggests a significant improvement in liquidity, but the deviation of the GBTC ETF remains high, implying a decline in liquidity.”
ETF liquidity metrics for GLD Gold ETF, GBTC, Fidelity, and Blackrock Spot Bitcoin ETF.Source: Bloomberg/JP Morgan
Grayscale’s GBTC has seen significant outflows since converting into a spot Bitcoin ETF following the SEC’s landmark approval of multiple spot Bitcoin ETFs last month.
Prior to converting GBTC shares into an ETF, investors holding GBTC shares were locked in for at least six months before selling. By converting to ETFs, these investors are seizing the opportunity to cash out, causing massive selling as they exit their positions.
These sales, in turn,Stock prices are expected to be depressed in the weeks following the ETF’s approval, but there are signs that the market slump is easing, with Bitcoin trading at close to $45,000 the previous day.
Edited by Stacey Elliott.