According to a research report released by JPMorgan (JPM) on Thursday, a sizable portion of Grayscale Bitcoin Trust (GBTC) shares have been purchased in the secondary market this year at a substantial discount to net asset value (NAV) in anticipation that the U.S. Securities and Exchange Commission (SEC) will approve the trust’s conversion to an exchange-traded fund (ETF).
According to the bank, since the beginning of the year, GBTC has received a net amount of $2.5 billion, or $2.7 billion if the covering of short interest is included.
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Jerrymusa.com reports that this $2.7 billion would probably exit GBTC as these investors take their profits, assuming that the majority of this buying activity was speculative in expectation of GBTC being transformed into an ETF.
once GBTC is converted, profit,” wrote experts under the direction of Nikolaos Panigirtzoglou. The authors stated, “If this $2.7 billion leaves the bitcoin space entirely, there will undoubtedly be significant downward pressure on bitcoin prices.”
“Any negative market impact would be more modest if instead the majority of this $2.7b shifts into other bitcoin instruments, like the newly created spot bitcoin ETFs post-SEC approval, which is our best estimate.”
According to the bank, however, “the balance of risks for bitcoin prices is skewed to the downside as some of this $2.7b is likely to completely exit the bitcoin space.”
If GBTC’s cost is not drastically reduced following its conversion into an ETF, a lot more than $2.7 billion could depart the company, the report added.